ESOP Advisors_ Inc by linzhengnd


									EEO Investigations
ELC Briefing

The Trustee & Employee Representative Team
North Star Trust Company
ESOP Advisors, Inc.
McDermott, Will & Emery
October 29-30, 2001
Agenda 10-29-01
     1:00-1:15 Introduction of Team
          North Star Trust Company
          ESOP Advisors, Inc.
          McDermott, Will & Emery
     1:15-3:30 ELC Background Briefing
          What is an ESOP
          What is ESOP Privatization
     3:30-3:45 Break
          Discussion of USPS SOW & Team Proposal
          Discussion of Work-plan & Procedures to Protect USPS employees
          from Ethics taint and Conflicts of Interest

 October 29-30, 2001              ELC Briefing                             2
Agenda 10-30-01
     8:00-10:00 EEOCo Interim Management
        Management Selection Criteria
        Management Recruitment process
        Results to Date
        Introduction of leading CEO candidate
     10:00-10:15 Break
     10:15-11:30 ELC & Project Work Plan
          Schedule of Site Visits
          Major Milestones
          Communication Plans
          Questions & Answers
 October 29-30, 2001                ELC Briefing   3
The Trustee & Employee
Representative Team
     North Star Trust Company
          Nationally recognized leader in ESOP & Fiduciary
     ESOP Advisors, Inc.
          Internationally recognized leader in ESOPs and
          ESOP Privatization
     McDermott, Will & Emery
          Top law firm, with nation’s largest employee
          benefits practice and largest ESOP practice

 October 29-30, 2001        ELC Briefing                     4
What is an ESOP?
     Employee Stock Ownership Plan
     Employee Benefit Plan
          ERISA Qualified Retirement Plan
          Similar to 401(k), Profit Sharing
     Corporate Finance Tool
     Vehicle for Employee involvement &

 October 29-30, 2001      ELC Briefing        5
The Private Sector
ESOP Track Record
            11,500 ESOP Companies in U.S. economy
            8.5 Million employees participate in ESOPs
            Highly successful government contractors which are
            employee owned include:
                 United States Investigative Services, (USIS), created in 1997
                 from the privatization of the OPM Office of Federal
            ESOP Companies more profitable, more productive
            ESOPs may work well in transitioning Federal workforce

  October 29-30, 2001                ELC Briefing                                6
Advantages of ESOPs
     ESOP motivates employees by enabling
     them to earn a “piece of the action”
     Employee Owners participate in
     corporate governance
     ESOP can create ready market for
     private company stock
     ESOP enhances cash flow

 October 29-30, 2001   ELC Briefing         7
Components of ESOPs
     ESOP Plan Document
     Summary Plan Description (SPD)
     Annual Valuation
     Annual Reporting to Employees
     ESOP Trustees
     ESOP Employee Advisory Committee

 October 29-30, 2001   ELC Briefing     8
How a Non-Leveraged
ESOP Works
     ESOP is a Trust separate from the
     ESOP is funded by company
     contributions (stock or cash)
     Employee contributions not allowed
     ESOP purchases stock from the
     company or current shareholders

 October 29-30, 2001   ELC Briefing       9
How do Employees get their stock?
      Stock in the ESOP trust is allocated to
      employees, typically according to their pro-
      rata compensation
      Allocated stock vests according to standard
      ERISA guidelines
      Vested stock, or the cash value of the stock,
      is distributed to employees upon death,
      disability or retirement
           If stock is distributed, employees have “put”

  October 29-30, 2001         ELC Briefing                 10
ESOP Privatization Process
     Feasibility Analysis
          Legal Analysis
          Business Case Analysis
          ESOP Implementation by Trustee & Employee
          Representative Team

 October 29-30, 2001        ELC Briefing              11
Discussion of Ethical/Conflict of
Interest Procedures
     David Fishel
          Ethics Compliance Representative
     Interaction of ELC members
          With non-ELC employees
          With The Team
          Contracting Officials

 October 29-30, 2001     ELC Briefing        12
What is ESOP Privatization?
     New Independent Corporation (EEOCo)
     created by Trustee/Employee Representative
     to provide services under contract to
     EEOCo employee owned from day one using
     an (ESOP)
     Outside management often required
     Financing required from Banks, etc.....
     Marketing, Personnel & Accounting

 October 29-30, 2001   ELC Briefing               13
Federal Employee Ownership
Privatization Case Studies:
      Office of Personnel Management, Office of
      Federal Investigations (OPM-OFI)
      Stand Alone Strategy
           Feasibility Study established potential for 100%
           ESOP Newco
           Newco received “Sole Source” contract
           Contract performed using Government Furnished
           Equipment (GFE)
           Start Up Financing negotiated in contract terms

  October 29-30, 2001        ELC Briefing                     14
USPS EEO Investigations
     USPS Statement of Work for Trustee &
     Employee Representative services
     Team Proposed Approach to providing
     Trustee & Employee Representative services
     USPS approved Work-plan for EEO
     investigations privatization
     Procedures for protecting employees and ELC
     members from ethics taint or conflict of

 October 29-30, 2001   ELC Briefing            15
Management Selection Criteria
     Past Experience as Executive
          P&L responsibility for Government services contractor Firm
          Experience in negotiating government service contracts
          Employee Ownership/ESOP Experience
          Start Up Experience a plus
     Energy & Dedication
     Availability for interim management consulting
     assignment beginning November 2001 and full time
     May 2002

 October 29-30, 2001            ELC Briefing                           16
USPS EEOCo Management
Recruitment Process
     Develop and ratify management selection
     Identify candidates
          Washington Post Ad
          ESOP Network
            • ESOP Association
            • Foundation for Enterprise Development
          Professional Networks of Trustee & Employee
          Representative (ER) Team
          Professional Management Recruiters

 October 29-30, 2001            ELC Briefing            17
USPS EEOCo Management
Recruitment Process
     ER Reviews Resumes
     ER Interviews candidates that meet the
     selection criteria
     Down-select to top candidates
     Top candidates interviewed by Trustee
     Top candidates presented to ELC
     Management consulting contract for
     selected interim management team
 October 29-30, 2001   ELC Briefing       18
Initial Management Candidates
     Chief Executive Officer (CEO)                  Chief Financial Officer (CFO)
          Suzanne Reister                           /Contracts Administration
          Vish Varma                                    Bill McIntyre
          Bill Macintire                                Larry Seifert
          Alan Skvirsky                                 Alan Smith
          Dennis Praether                               Corby Clement
          Helen Clark                               Management & Sales Consultants
          Linda Gagnon                                  Trish Kyle
     Chief Operating Officer (COO)                      Louise Fisher
          Nancy D.
          Vish Varma
          Rodney Pieper
          Hank Demata
          Myra Shiplitt
          Charles Carron

 October 29-30, 2001                 ELC Briefing                                    19
Major Milestones
     Selection of Management Team
     Site Visits
     Business Plan Development
     USPS Cost Proposal
     Letters of Intent
     Negotiation of Contract
     Complete Transition Plan
 October 29-30, 2001   ELC Briefing   20
Site Visits
      Great Lakes
      New York
      Capital Metro

  October 29-30, 2001   ELC Briefing   21
Contact Information
     ESOP Advisors, Inc.
          703-758-8773 Phone
          703-860-9144 Fax

     North Star Trust Company
          312-559-9761 Phone
          312-559-9762 Fax

     McDermott, Will & Emery

 October 29-30, 2001            ELC Briefing   22
Informational Web Sites:
     Copy of OMB Circular on ESOP Privatization; policy guidance

     Web Site for ESOP Advisors, Inc.

     Information on USIS, OPM’s successful ESOP Privatization

     National Performance Review’s summary of NAVSEA ESOP Privatization

     Army Small & Disadvantaged Business (SADBU) Site

     General Accounting Office Commercial Activities Panel

     Article on Application of 501{c}3 and ESOPs to Privatization

 October 29-30, 2001                     ELC Briefing                                         23

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