As the writer of a blog about employee stock ownership plans (ESOPs) I want to believe that everyone is interested in the topic. But I know that isn’t true.
For example, the Galapagos giant tortoises (Chelonoidis nigra) aren’t interested in the plans. Even if they owned businesses (which I realize that they don’t), they wouldn’t likely be very interested in ESOPs for several reasons. They:
- live a really long time. Succession planning simply isn’t a high priority as their life span is more than 100 years. In addition, they remain active throughout their entire life. Unlike humans, they don’t retire.
- tend to be solitary reptiles so they are unlikely to have business partners (and unlikely to need to make unexpected ownership changes). Businesses owned by giant tortoises would likely be sole proprietorships.
- spend most of their day eating. As herbivores they don’t have to worry about diversification (of their diet — they can live for over a year without food and water.) They have little need to extract the value out of their business to plan for lean times.
- do not mate for life. Therefore, they don’t need to concern themselves with what happens to the business when the relationship is over.
- don’t parent — when the female tortoise lays her eggs, she buries them and leaves. There is no concern about transitioning wealth to future generations.
- tend to live in Ecuador (which includes the Galapagos Islands) where they do not enjoy the types of tax incentives to establish ESOPs that are found in the United States.
Therefore, it is not surprising that Galapagos giant tortoises are not clamoring for more information on ESOPs. But that doesn’t mean we can’t learn from them.
Charles Darwin noted that after his famous trip to the island in 1835 that the tortoises differed from island to island. They had evolved over time as a result of their local conditions. As stated by Herbert Spencer building on the works of Darwin:
It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.
Businesses must also evolve to meet challenges they face and for many that will mean forming an ESOP. Over the next several months we will continue to explore ESOPs and the benefits they bring to owners, companies, and their employees.
In addition to blogging here, I also tweet regularly about topics of interest to ESOPs @jlripperger.
I am interested in comments from readers regarding other benefits you see ESOP’s having for both companies and their employees.Affiliation Disclosures While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392t12102203xs