October 1, 2017.
What is Employee Ownership Month?
Employee Ownership Month (EOM) occurs every year in October and is an opportunity for ESOP (Employee Stock Ownership Plan) companies across the nation to educate employee-owners, the public and government officials about the benefits of employee ownership.
Here at Carl Warren, EOM is a time for us to celebrate and thank each of our employee-owners as the success of our ESOP is a result of their dedication and hard work. Without it, our ESOP wouldn’t be what it is today. We also take this opportunity to focus on building our culture of ownership and continue to educate our employee-owners on the benefits of employee-ownership.
We will be kicking off EOM on Monday with company-hosted coffee and donuts for each of our offices and our resident employees. We are encouraging our employees to dress up for Spirit Day, Sports Day and Halloween and to participate in weekly hosted games and activities centered around ESOP trivia.
Giving back is an important part of our ESOP culture so our offices/employees have been given the option to either volunteer, as a team, for a local non-profit OR collect donations during October for a non-profit. Last year, Carl Warren’s Giving Back for EOM campaign impacted 8 wonderful organizations – we hope we can contribute as much (hopefully more!) to the community this year.
What is an ESOP?
An ESOP is an employee benefit plan which enables employees to own stock in the company that employs them. Like a 401K, an ESOP is a defined contribution plan – employers contribute a defined amount to the plan on behalf of our employees every year. Mr. Carl Warren created our ESOP in 1975 for 4 main reasons:
- To help our employees with their retirement
- To create liquidity for shareholders without selling the Company
- To create a stock-based employee benefit that is cost effective and motivates employees
- To create a culture of ownership that will enhance all of our stakeholders’ future value
How Do ESOPs Work?
Companies set up a trust fund for employees and contribute either cash to buy company stock, contribute shares directly to the plan or have the plan borrow money to buy shares. Contributions to the plan are tax deductible. Employees who meet eligibility requirements have an account in the ESOP trust set-up automatically. Employees pay no tax on the contributions until they receive the stock when they leave or retire.
ESOP Facts (source: National Center for Employee Ownership)
- There are roughly 7,000 employee stock ownership plans (ESOPs) covering about 14 million employees
- As many as 11 million employees buy shares in their employer through employee stock purchase plans
- Less than 10% of plans are public companies
- Companies that combine employee ownership with employee workplace participation show even more substantial gains in performance
Stay tuned as we will be posting pictures of our employee-owners and the celebrations.