Employee Ownership- a sample program by ogq15336

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                                                     Employee Ownership- a
                                                       sample program
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                                                           Week 2



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urship/Arthur-C-Brooks/e/9780132330763




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                                                           Week 2 Lecture
                                                     •Use Employee Ownership to Learn
                                                     how in-depth you should know your
 https://spears.okstate.edu/eee/classroom            policy/program

                                                     •Create a Logic Model for a program
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 http://www.waveland.com/Titles/Welch-Comer.htm




                                                     that uses Employee Ownership


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 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




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                                                                                                                                                                            What is a Logic Model?

                                                                                                       • Wandersman and Linney (1991) describe the logic model
 https://spears.okstate.edu/eee/classroom
                                                                                                         as:
                                                                                                       • a logical series of statements
                                                                                                       • linking a condition(s) in the community,
                                                                                                       • The activities that will be employed to address a specific
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                                                                                                       • condition, short term outcomes resulting from activities
                                                                                                       • and the long term impacts likely to occur as multiple
                                                                                                       • outcomes are achieved.
                                                                                                       • Thus the logic model provides a simple means of
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                                                                                                         presenting a program and establishing process and
          The utilization of the logic model as a system level planning and evaluation device
          David A. Julian , *
          Unite d Way of Franklin County, U.S.A.

          Available online 10 June 1998.

          Evaluation and Program Planning
          Volume 20, Issue 3 , August 1997, Pages 251-257
                                                                                                         outcome goals                                                                                                                                                        (Julian et al., 1995; Kumpfer
          http://0-www.sciencedirect.com.library.lemoyne.edu/science?_ob=ArticleURL&_udi=B6V7V-3SX0MC6-2&_user=735929&_handle=B-WA-A-W-AY-MsSAYZW-UUA-AAUDEZCWAA-AAUCCVZUAA-YVDVBVZVY-AY-U&_fmt=full&_coverDate=08%2F31%2F1997&_rdoc=2&_orig=browse&_srch=%23toc%235852%231997%23999799996%2312753!&_cdi=5852&view=c&_acct=C000040778&_version=1&_urlVersion=0&_userid=735929&md5=74e18c88c11484c288e50075705c7f03

                                                                                                       •                         et al., 1993; Wandersman & Linney, 1991).

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urship/Arthur-C-Brooks/e/9780132330763




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     Welch and Comer p. 9 Independent and Dependent Variables are implicit
                               in Logic Models
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                  IV
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                                                                                                                                                                                        DV
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    9&md5=6e6b6f92758532f01a88230d7ec29380
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                                                                                                                           IV  DV Each
                                                     Each Box is a step                                                                                                                           Line/Arrow
                                                     counted or monitored                                                                                                                           is a
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                                                                                                                                                                                                   hypothesized
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                                                                                                                                                                                                   linkage of
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                                                                                                                                                                                                   causal
                                                                                                                                                                                                   relationship.

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        Resources include     Activities         Outputs are the
       human and financial include all        products, goods and
       resources as well as those action services provided to the
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       other inputs required     steps          programs direct
           to support the    necessary to
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                                                   customers.
                                             For example, conducting
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         program such as       produce      research is an activity and
            partnerships.      program       the reports generated for
          Information on       outputs.        other researchers and
       customer needs is an               technology developers could
       essential resource to               be thought of as outputs of
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            the program.                            the activity.
    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7V-3WR4K4M-8&_user=735929&_handle=B-WA-A-W-AV-MsSAYZW-UUW-AAUDUAADDV-AAUVCEWCDV-YBACCWCBC-AV-
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   80                                                                                                                                                                                                                          Fig. 1. Elements of the Logic Model.
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                                                        Customers,                                                                              Outcomes are
                                                        the users of                                                                           characterized as
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                                                         a product                                                                            changes or benefits
                                                         or service.                                                                            resulting from
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 http://www.waveland.com/Titles/Welch-Comer.htm                                                                                             activities and outputs.
                                                                                                                                              Programs typically
                                                                                                                                                have multiple,
                                                                                                                                             sequential outcomes
                                                                                                                                           across the full program
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                                                                                                                                              performance story.
    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7V-3WR4K4M-8&_user=735929&_handle=B-WA-A-W-AV-MsSAYZW-UUW-AAUDUAADDV-AAUVCEWCDV-YBACCWCBC-AV-
    U&_fmt=full&_coverDate=06%2F30%2F1999&_rdoc=8&_orig=browse&_srch=%23toc%235852%231999%23999779998%23102970!&_cdi=5852&view=c&_acct=C000040778&_version=1&_urlVersion=0&_userid=735929&md5=6e6b6f92758532f01a88230d7ec293
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   80                                                                                                                                                                                                                          Fig. 1. Elements of the Logic Model.
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         short term       intermediate  Long term outcomes or
       outcomes, those outcomes, those program impacts, follow
         changes or       changes that
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                                           from the benefits
       benefits that are result from an   accrued though the
        most closely     application of intermediate outcomes.
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       associated with   the short term
      or caused by the     outcomes.
      programs outputs
                                                                                                       Tip: List out your outcomes them put them in
                                                                                                                    chronological order.
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    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7V-3WR4K4M-8&_user=735929&_handle=B-WA-A-W-AV-MsSAYZW-UUW-AAUDUAADDV-AAUVCEWCDV-YBACCWCBC-AV-
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   80                                                                                                                                                                                                                          Fig. 1. Elements of the Logic Model.
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    Example    from reading:
    results from a laboratory prototype for an energy
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    saving technology may be a short-term outcome;
    the commercial scale prototype an intermediate
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    outcome, and a cleaner environment once the
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    technology is in use one of the desired longer term
    benefits or outcomes.

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                                                                                                       Tip: List out your outcomes them put them in
                                                                                                                    chronological order. 1. Elements of the Logic Model.
    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7V-3WR4K4M-8&_user=735929&_handle=B-WA-A-W-AV-MsSAYZW-UUW-AAUDUAADDV-AAUVCEWCDV-YBACCWCBC-AV-
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   80                                                                                                                                  Fig.
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                                                     Program goals should stress

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                                                     • only final outcome goals.
                                                     • various types of goals from the
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                                                       development of resources through final
                                                       outcomes.
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                                                         key contextual factors external to the
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                                                     program and not under its control that could
                                                       influence its success either positively or
                                                                       negatively.

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    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7V-3WR4K4M-8&_user=735929&_handle=B-WA-A-W-AV-MsSAYZW-UUW-AAUDUAADDV-AAUVCEWCDV-YBACCWCBC-AV-
    U&_fmt=full&_coverDate=06%2F30%2F1999&_rdoc=8&_orig=browse&_srch=%23toc%235852%231999%23999779998%23102970!&_cdi=5852&view=c&_acct=C000040778&_version=1&_urlVersion=0&_userid=735929&md5=6e6b6f92758532f01a88230d7ec293
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   80                                                                                                                                                                                                                          Fig. 1. Elements of the Logic Model.
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                                                     • http://www.urban.org/center/cnp/projects/
                                                       outcomeindicators.cfm
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 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




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 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




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 https://spears.okstate.edu/eee/classroom




 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




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 http://www.maxwell.syr.edu/
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                                                         Why feature Employee
                                                        Ownership as an Example?
                                                     • Brooks 2009:69 –example of overlap
                                                       between entrepreneurship and social
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                                                       entrepreneurship
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                                                     • Create a logic model for a variation of
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                                                       Employee Ownership from the following
                                                       perspectives:
                                                       – A for-profit business
                                                       – A government agency
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                                                       – A non-profit (that encourages E-Ownership
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                                                     Break into three groups (each
                                                     will make a logic model and
                                                        present it to the class):

                                                     – A for-profit business
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                                                     – A government agency
                                                     – A non-profit (that encourages E-Ownership
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 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




                         Employee Ownership:
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                                 Reinforcing Core Values

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                                                     Classroom module created by
                                                     Larry Bennett
                                                     Entrepreneurship and Emerging
                                                     Enterprises Department,
                                                     Whitman School of Management,
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                                                     Syracuse University


 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




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                                                     What is Employee Ownership?
                                                     An Employee Stock Ownership Program allows
                                                     some or all of a company’s employees to own
                                                     either a part or all of a business

 https://spears.okstate.edu/eee/classroom            Each company needs to identify both the reason
                                                     for and the employee-ownership approach that
 http://student.maxwell.syr.edu/maxwellnetworking/   reflects its own unique conditions and
 http://www.waveland.com/Titles/Welch-Comer.htm


                                                     circumstances




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 http://www.maxwell.syr.edu/
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 http://enitiative.syr.edu/eTeam.html                            Quick U.S. Facts
                                                     • 1974 – Employee Retirement and Income
                                                           Security Act (ERISA) formalizes
                                                     Employee Stock Ownership Programs
                                                     • 1975 – 1,600 Employee Stock Ownership
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                                                           Programs with over 250,000 participants
                                                     • 2006 – 11,500 Employee Stock Ownership
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                                                           Programs with over 10 million employee-
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                                                           owners
                                                     Well known ESOPs include:
                                                           Anheuser-Busch
                                                                        Procter & Gamble
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                                                                                   Sherwin-Williams
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                                                         Employee-Ownership in the U.S.:
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                                                          A History Lesson for the Future




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                                                       1920's          1950's           1974                    Today
                                                      First Modern   Louis Kelso   Russell Long and
                                                     Employee-Owners                  ERISA           Millions of Employee-Owners

                                                                                                           12,000+ ESOPs
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 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




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                                                      Why Employee Ownership?

                                                         The “Traditional” Management View
                                                     • Employees have little interest in the financial
                                                       performance of the business
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                                                     • Managers must engage in a process of constant
                                                       supervision, providing rewards/incentives, and
                                                       coaxing employees
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 http://www.waveland.com/Titles/Welch-Comer.htm




                                                      All in order to get employees to achieve
                                                      corporate financial goals

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 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763

                                                     An Ownership Culture Implies
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                                                     a Community of Stakeholders
                                            How Can I Create a Community of Stakeholders?



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                                Agency Theory . . .
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    “…problems arise in corporations because the agents (top management)
    are not willing to bear responsibility for their decisions unless they own a
    substantial amount of stock in the corporation.” – Hunger & Wheelen

    Employee Stock Ownership Programs bring the concepts of
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    responsibility, common sense, and commitment behind Agency
    Theory to work for all employees.
 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763                   Applying “Agency Theory for the
 http://enitiative.syr.edu/eTeam.html                               Masses”
                                                     Wealth accumulation should also have an
                                                     effect on non-managerial employees.
                                                     Employee Ownership might be
                                                     characterized in a manner that ranges from
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                                                              weak > medium > strong
                                                     in terms of building employee responsibility
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                                                     and/or accountability for the well-being of
                                                     the business

                             Distant/weak                              Medium            Strong
                           employee ownership                         employee          employee
                                  ties
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                                                                    ownership ties    ownership ties

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                                The Spectrum
Tax and Cash Benefits                                                         A Culture of Ownership




Compensation       Executive      Management        Profit Sharing    Gain Sharing   Employee
  Substitute     Compensation   Equity Incentives Stock Bonus Plans   Value Plans    Ownership
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                                                     Types of Employee Ownership



                                                     Three basic categories of Employee Stock
 https://spears.okstate.edu/eee/classroom            Ownership Programs:

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                                                     1.   Individual-based plans
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                                                     2.   Company-wide plans
                                                          or
                                                               1. Direct
oices/2008/12/say_yes_program_receives_1_mil.html              2. Indirect
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                                                     Forms of Individual Ownership
                                                     •   Stock Grants
                                                     •   Direct Stock Purchase Programs
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                                                     •   Stock Option Plans
                                                     •   Non-qualified Deferred Compensation
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                                                     •   Stock Appreciation Rights
                                                     •   Restricted Stock Units


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 http://www.maxwell.syr.edu/
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                                                                Individual-based plans
                                                     • Flexible in design
                                                     • Designed, primarily to award key managers
                                                     • Relatively inexpensive to set up and administer
 https://spears.okstate.edu/eee/classroom            • Often based on achieving performance and/or
                                                            time linked (vesting)
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                                                     Vesting is a firm’s time/work requirement imposed for
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                                                     employees to receive full value of optional incentives, e.g.
                                                     an employee must remain with the company for five years
                                                     in order to receive full stock right values, et al. Vesting
                                                     must follow ERISA parameters.
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 http://www.maxwell.syr.edu/
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                                                 Stock grants as performance incentives
                                                             1

                                                     • 2.71 million shares of common stock
                                                     • Distributed to 4,000 employees in 2007
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                                                     • Approximately, $14,500 per full-time employee

                                                 Direct Stock Purchase Programs
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                                                 make stock readily available to employees
                                                         2


                                                     • Administered by a third party
                                                     • No identified discounts for employee stock
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 http://www.maxwell.syr.edu/
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                                                     Stock Option Plans
                                                       • Employees purchase employer company stock
                                                         at a given price
                                                       • Resell it in the future at the market price

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                                                     Non-qualified Deferred Compensation
                                                       • Promises to pay employees in the future
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                                                       • No maximums on contributions (unlike 401k
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                                                         plans)
                                                       • Little to no cash required by company to start
                                                       • Only top 10% of salaried employees can
                                                         participate

oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html                Stock Appreciation Rights1
                                                       •   Similar to stock options
                                                       •   Stock granted at a set price for future purchase
                                                       •   After vesting stock can be “redeemed”
                                                       •   No money required to exercise them for cash
 https://spears.okstate.edu/eee/classroom

                                                     Restricted Stock Units2
                                                       • Promises to give employees stock at the end of a
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm
                                                         vestment period
                                                       • Taxes paid by withholding appropriate share
                                                         amounts when stocks are transferred
                                                       • Long-term horizon, all employees may not
                                                         realize potential value during vesting period
oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html
                                                          Company-Wide Plans
                                                     • Includes a wide cross-section of
                                                     company ownership
                                                     • Strict rules relating to participation
                                                     • Significant tax advantages
 https://spears.okstate.edu/eee/classroom


                                                     Types of company-wide plans include:
                                                     • Employee Stock Ownership Plans
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm
                                                     (ESOP)
                                                     • Employee Stock Purchase Plans (ESPP)
                                                     • 401(k) and other Employee Retirement
                                                       Income Security Act (ERISA) plans

oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html                 Employee Stock Ownership Plans
                                                                 (ESOP)
                                                     Most common vehicle to buy out existing
                                                     owners
                                                     • Designed for investment in the company’s stock
 https://spears.okstate.edu/eee/classroom
                                                     • ESOPs can borrow money to purchase stock
                                                       Payback over time & tax-deductible corporate
                                                     contributions
                                                     • Tax advantages (principal and interest on ESOP loans,
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




                                                       potential tax shelter for corporate earnings to the
                                                     extent
                                                       of ESOP ownership)
                                                     • Deferral/avoidance of capital gains for owners selling
                                                     stock     to ESOP
oices/2008/12/say_yes_program_receives_1_mil.html


                                                     •Tax deductions for ESOP stock dividends
 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html
                                                     Leveraged ESOPs
                                                      – Original owners gain tax advantaged liquidity
                                                      – Principal repayment of ESOP debt by the company is
                                                          tax-deductible
                                                      – Specific subsidiaries/divisions can be sold to
                                                          employees
 https://spears.okstate.edu/eee/classroom
                                                      – M & A can benefit from ESOP tax advantages
                                                     Non-leveraged ESOPs
                                                      – A tax-qualified retirement savings plan
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




                                                      –Company contributes to ESOP annually on behalf of
                                                          employees (similar to a pension plan)
                                                      – Tax deduction for fair market value of contributed
                                                      shares

oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html
                                                        Employee Stock Purchase Plans
                                                                   (ESPP)
                                                     • Allows employees to purchase company stock
                                                     payroll deductions
 https://spears.okstate.edu/eee/classroom
                                                     • Stocks usually sold at a discount

 http://student.maxwell.syr.edu/maxwellnetworking/
                                                     • Best suited to publicly traded companies
 http://www.waveland.com/Titles/Welch-Comer.htm
                                                       – Securities registration rules restrictive
                                                       – Costs in setting up and administering
                                                       – Liquidity for publicly traded shares


oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html
                                                       401(k) and Other Qualified Plans

                                                     • Employees make pre-tax contributions to
                                                     retirement plans
 https://spears.okstate.edu/eee/classroom
                                                     • Employers can contribute company stock as an
                                                     employer match contribution rather than cash
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm      • Employers may allow employees to purchase
                                                     company stock (requires pre-compliance with
                                                     securities registration rules)


oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763

                                                     How to Start an Employee Stock
                                                            Ownership Plan
 http://enitiative.syr.edu/eTeam.html




 https://spears.okstate.edu/eee/classroom




 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html                   Nationwide Facts and Figures
                                                     82% of ESOP Association members reported
                                                     motivation and productivity levels increased as a
                                                     result of the ESOP3
                                                     80% of employee-owned firms outperformed the Dow
                                                     Jones Industrial Average, the NASDAQ Composite,
                                                     and the S&P 500, based on a survey in 20021
 https://spears.okstate.edu/eee/classroom




                                                     ESOP companies’ productivity levels jumped 4%
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm
                                                     after becoming an ESOP2
                                                     Total ESOP shareholder returns increased by 2%2
                                                     Average contribution to employer-owners ESOP
                                                     accounts, 13%. 87% of ESOP Association members
                                                     offer additional retirement benefits.3
oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
                                                     A “Steak” in the Outcome
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html




                                                       Giving someone a “sense of
 https://spears.okstate.edu/eee/classroom

                                                       ownership” is like feeding someone
                                                       a “sense of lunch”.
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm




                                                                               -Corey Rosen,
                                                       NCEO


oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/
urship/Arthur-C-Brooks/e/9780132330763




 http://enitiative.syr.edu/eTeam.html


                                                     Information on employee ownership and
                                                     specialists in employee ownership creation,
                                                     valuation, financing, and consultation is
                                                     available through:
 https://spears.okstate.edu/eee/classroom

                                                             www.beysterinstitute.org
 http://student.maxwell.syr.edu/maxwellnetworking/


 http://www.waveland.com/Titles/Welch-Comer.htm
                                                                         and

                                                             www.esopassociation.org


oices/2008/12/say_yes_program_receives_1_mil.html




 http://www.maxwell.syr.edu/

								
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