A new survey by the ESOP Association reveals that a decade ago nearly 12% of its membership sponsored ESOPs at publicly traded firms, compared with just 3% in their 2000 member survey. At the same time, the average amount of stock held by the ESOP is 66%, nearly double the level of a decade earlier.
More than 60% of ESOPs are related to purchasing company stock from an exiting shareholder. However, more than a third (35%) established the ESOP because of the desirability of employee ownership as a benefit. Nearly three-quarters of survey respondents reported that the ESOP improved employee motivation and productivity.
More than 76% of respondents have 401(k) plans in addition to the ESOP and 10% have pension plans. All in all, 86% of ESOP companies offer an ERISA retirement plan in addition to the ESOP.
Roughly half (49%) of survey respondents were S Corporation ESOPs, while 25% of respondents who are presently C Corporation ESOPs are considering converting to S Status. S Corps. have been permitted by law to sponsor ESOPs since 1998, according to the ESOP Association.
The ESOP Association is a national trade association representing more than 2100 ESOP companies and their approximately 750,000 employee owners.
– Nevin Adams