The Employee Ownership Update
May 1, 2019
Texas ESOP Bill Passes Vote; Needs Support to Move Forward
H.B. 1198 passed a committee vote in the Texas House of Representatives by 12-0. The critical step now is to get it to a vote because the session ends in one month. The bill would:
- Allow a professional corporation to organize as an ESOP as long as all of the voting trustees are licensed.
- Establish the Employee Ownership Assistance Office in the Office of the Governor, Texas Economic Development and Tourism Office.
- Allow certified Historically Underutilized Businesses (HUBs) to transition to an ESOP structure without forfeiting HUB status.
- Create contracting preferences for ESOPs for the state, cities, counties, and special districts.
If you are in Texas and want to support the bill, please contact Corey Rosen at firstname.lastname@example.org
as soon as possible to get the names and contact number of members to contact about the bill.
Parsons and Mayville Engineering IPOs Set
Parsons Corporation, a 100% ESOP-owned engineering company with 16,000 employees, has set the terms for its IPO. The ESOP will continue to own 80.8% of the shares. The offering is expected to raise over $500 million. Meanwhile, Mayville Engineering, a 100% ESOP-owned metal fabrication company with 3,100 employees, has started its own IPO process, expecting to raise $125 million. The two IPOs are the first by majority ESOP-owned companies since the 1990s.
Is Huawei Really Employee Owned?
Huawei, the world's largest telecom equipment and communications electronics vendor, has long said that it is 99% owned by most of its 174,000 employees. Critics of Huawei have argued it is really controlled by the Chinese government, and have used that argument in trade battles with the company. A new paper by Donald Clarke of George Washington University and Christopher Balding of Fulbright University Vietnam (Who Owns Huawei?
) concludes that while employees own 99% of the company's equity value through a kind of synthetic equity plan broadly available to company's employees and operated by the company's union, the employees have no control rights over the company. The remaining 1% is owned by the founder. Clarke and Balding say that because the union is effectively controlled by the state, the state really runs the company. Huawei disagrees with this characterization. Ownership without control, of course, is common in employee ownership plans, so assessing this issue depends on what people mean by ownership. There is agreement that Huawei's employee compensation is significantly affected by company performance.
ESOPs and Primary Town Hall Forums
With the primary season about to launch, town hall forums will become a staple of at least the Democratic primaries, and possibly Republican as well. This is a great opportunity to promote employee ownership. Send employee owners to the town halls ready to ask whether the candidates support employee ownership, or consider inviting candidates to a town hall at your own facility. Even better, contact the state Democratic or Republican party to find out schedules and whom to contact to suggest a town hall on this idea. You can also go to the candidate's website and contact them via their contact form. With so many candidates in the race, while getting a response from any one specific person may be a long shot, chances of finding one of the 20-plus to say yes are much better.
Author biography and other columns in this series
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