It’s All About Me, Not Me and Us

Recently I was returning to Des Moines from New York City via Minneapolis.  The flight out of New York City’s Laguardia Airport was delayed and there were several passengers that were going to have very tight connections (and to compound the issue many of those connections were the last flight of the day).  The flight attendant asked those passengers with Minneapolis as their final destination to let the others exit first to increase their likelihood of making their connecting flights.

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I was in row 23.  There were over 125 people in front of me.  Not a single one of them waited.  Even those that had checked their bags and were going to have to wait for their luggage in baggage claim got off as soon as they could.  Undoubtedly people missed their connections as a result.

Fortunately, not everyone takes a similar approach when deciding to sell all or part of their company.  Thousands of business owners have considered not only their needs but those of their employees by establishing Employee Stock Ownership Plans (ESOPs).  Over 10,000 companies employing approximately 10.3 million employees have adopted ESOPs (10% of the private sector workforce)1.

The ESOP offers advantages to both the business owner and the employees.  The business owner gains a buyer that can pay up to fair market value for their stock.  They also benefit from the tax treatment of the ESOP and the stock sale proceeds.  Often times the business owner finds that the ESOP is the most beneficial approach to selling their stock due to the tax treatment.

The employees benefit from a new retirement plan invested primarily in the stock of the company that they work for.  Typically this plan is in addition to their existing retirement plan providing additional avenues for them to accumulate savings for retirement.

The benefits are further examined in my August 2012 article on LifeHealthPRO.com

http://www.lifehealthpro.com/2012/08/20/exploring-the-abcs-of-an-esop-transaction

P.s. I made my connection.

12010 ESOP Company Survey.  The ESOP Association. 

Affiliation Disclosures

No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values. Company stock is not a pooled investment. Stock may experience greater volatility and should not be directly compared to investment options that have a more diversified investment mix. It is not intended to serve as a complete investment program by itself.

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 50392.

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