Total Plan Assets: $56 million
Participants: 1,079
Participation Rate: 97%
Average Deferral Rate: 5.6%
Default Deferral Rate: 5%
Default Investment: T. Rowe Price Retirement Funds
Automatic Enrollment:
Yes
Automatic Escalation:
No
Employer Contribution: 100% on 5%, +ESOP

Pairing a 401(k) plan with an employee stock ownership plan (ESOP) has some clear advantages in helping SRC Holdings Corp. employees save for retirement. In addition to a 5% 401(k) match, the company contributes between 6% and 8% of pay to the ESOP plan, which is in company stock.

“We call this a ‘wealth builder’ more than we call it a ‘retirement plan,’” Krisi Schell, director of talent and culture, says of the Springfield, Missouri-based remanufacturing company. “Coming to this organization, employees have this additional opportunity to build wealth by contributing to the success of the company.”

Employee-owned SRC traces its roots to the 1983 buyout by a group of International Harvester Co. employees from the part of that company that rebuilt truck engines. “When you have an ESOP, the better the company performs, the employees have a share in that success,” Vice President of Finance Laura Ruzicka says. “But it takes time to build wealth in an ESOP.”

Often it takes about five years after joining the company for an employee’s ESOP stock to reach a substantial value, Schell says. “But even before then, we want them to see that potential,” she says.

To make that longer-term scenario more real for newer employees, SRC conducts activities like showing videos in employee meetings that feature more-senior employees, who speak about the impact the ESOP has had on their long-term financial health. “Someone who has been here 20 years can talk about the value of the plan to them,” Ruzicka says. And SRC does “lunch and learn” sessions with targeted education for employees at different stages of vesting.

SRC ties those personal touches together with education that helps employees learn the mechanics of how the ESOP works. The company wants employees to understand how good financial results for the company lead to their ESOP holdings gaining value over time, as the valuation of the company’s stock increases. Most divisions meet weekly to talk about their respective progression on business goals, Schell says.

“We educate all of our employees about the balance sheet and the income statement,” Ruzicka says. As they feel more confident in the company’s financial health and the prospects for SRC’s stock, that hopefully makes employees feel comfortable about setting aside long-term savings for their retirement.

“They understand that they truly have a stake in the outcome in the company, because they have shares in the company,” Schell says. “They are able to understand how the performance of the company reflects in the stock value of the company, which affects their retirement savings.”

The company also designates the month of October as “ESOPtober,” and has a range of educational and celebratory events focused on its ESOP. SRC aims to keep it entertaining through activities like cookouts where managers cook the food for their employees, and employees play carnival games. SRC divisions also design their own custom T-shirts with ESOP-related sayings. “We try to make the education process something that everybody will want to participate in,” Ruzicka says. “We’ve got all kinds of games we play. We want education to be fun.” —Judy Ward

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