TOTAL PLAN ASSETS/PARTICIPANTS:  $33.9 million/334 
PARTICIPATION RATE:  96.1%
AVERAGE DEFERRAL RATE:  8.5%
AUTOMATIC ENROLLMENT:  No
EMPLOYER CONTRIBUTION:  100% of 8%, plus variable annual contribution, both utilizing company stock

For the past decade, Restek Corporation has had a KSOP—a single plan that combines both 401(k) and ESOP [employee stock ownership plan] elements. That meets a goal for the Bellefonte, Pennsylvania, maker of tools used to measure the quality of air, water, soil, foods, pharmaceuticals, and chemical and petroleum products.

“Because the founder wanted employees to have ‘skin in the game,’ we attached an ESOP to our existing 401(k) plan, to create a profit-sharing and ESOP plan where employees could use their 401(k) savings to purchase Restek shares from the original shareholders,” says Bryan Wolcott, the company’s head coach and a member of its leadership team.

Employees have owned 100% of Restek since the 2008 ESOP transaction. The employer matches 100% up to 8% of salary an employee contributes, utilizing employer stock through the ESOP. Restek also makes a variable annual contribution in the form of additional company stock, decided by its board of directors. The 8% match plus the annual variable contribution traditionally has meant the employer contributes the equivalent of more than 10% of pay.

Participants also benefit from the rising value of the stock. The employer match is in company shares, which are credited based on a formula using the share cost when the ESOP transaction was made, at year-end 2008. Due to the company’s growth since then, “the shares’ actual value when the match occurs now is higher than the 2008 cost,” Wolcott says. Because of the share-price gain, “employees are typically realizing a 15% match value for their 8% deferral. This helps [them] understand the value of our stock and the importance of increasing share value over time.”

The 401(k) element of the plan also plays a distinct strategic role in the KSOP. “The 401(k) is a different investment vehicle from the ESOP, so investing in both is a good diversification strategy,” Wolcott says. “The goal is for employees to invest in the 401(k) and be rewarded with a company match.”

Restek rarely has a new hire who has participated in a KSOP or ESOP before, says Christina Marshall, vice president, human resources (HR). All full-time employees and regular part-time employees are eligible to participate on the first of the month following their month of hire. The KSOP doesn’t automatically enroll but has 96.1% participation.

Personalized education at the outset helps employees understand the plan and value of participating, Marshall says. “We meet with every new hire to orient them,” she says. “We review both sides, the 401(k) and ESOP, and explain how the plan works. Our new-hire orientation groups are typically one to three people, so it really allows us to have a conversation with the employees.”

During the meeting, Restek also offers a little history about the ESOP and an overview of how the privately held company’s share value is determined, Marshall says. “We give the new hires ideas to think about how their role at the company, and how they think about ownership, impacts the outcomes we achieve together,” she says. —Judy Ward

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