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ESOPs have to operate according to a complex and detailed set of rules to make sure they really benefit employees. It’s a fair trade—Congress has provided ESOP companies, their owners, and their employees with a number of tax benefits.

Your company’s ESOP valuation sometimes comes as a surprise. Maybe you had a strong year, but the stock price did not go up very much, or even went down. Or maybe you had not such a good year, but the stock price still did okay. What’s going on?

Yes, as long as it follows common best practices.

1. The Idea of Employee Ownership Goes Way Back: Alexander Hamilton and Thomas Jefferson were bitter rivals, but they agreed that the government should help rebuild the whaling industry—but only if the crews got a share of the profits and/or ownership.

In thinking about what to say in my closing remarks at this year’s annual conference, I decided to focus on a few things that great employee-owned companies do that set them apart. It’s not a definitive list, but it is what has really struck me about great ESOP companies over the years.

You may have heard about private equity, or perhaps you know someone whose company was sold to a private equity firm. Maybe you have even read that there is a new movement in some private equity firms to include employees as owners in some of their deals. There is a pretty good chance that when your company set up its ESOP, selling to a private equity firm was, at the very least, a potential option.

In the 1960s and 1970s, underfunded pension plans garnered a great deal of public attention.

We often get questions from employees that start off with “why can’t I...?” These questions focus on additional rights employees would like to have and are based on the idea that if you are an owner, you ought to have certain rights.

In September 2023, I had the opportunity to sit down with Kerry Siggins, the CEO of StoneAge Inc., a fast-growing manufacturing company. Under Kerry’s leadership, StoneAge, a 100% ESOP-owned manufacturer of water-blasting tools in Durango, CO, has grown tremendously. Following Kerry and StoneAge’s example of developing an ownership mindset, individuals can elevate themselves from being mere paycheck players to becoming top performers in their field.

It is often said that the ESOP alone does not create engagement or better business results, but that companies need to be intentional about creating practices that build culture and lead to better engagement.