The fabulous Alaska ESOP: there are benefits in providing your company with an employee stock ownership plan.

AuthorWilliams, Colleen Flood

Not to be confused with Aesop's Fables, this is the tale of the fabulous Alaska ESOP. Just what is an ESOP? Where does one learn about ESOPs? How and why would one form an ESOP? What companies in Alaska have gone ESOP? What's so fabulous about the Alaska ESOP?

An ESOP is an employee stock ownership plan. It is an employee benefit plan that makes the employees owners of stock in their company. An ESOP is required by law to invest first and foremost into the securities of the sponsoring employer. An ESOP also has special borrowing rights, which allow for leveraged ESOPs to be facilitated as a method for corporate finance. And that's just the tip of the ESOP iceberg.

Where can one learn about ESOPs? The National Center for Employee Ownership's Web site is a great starting point at http://www.nceo.org. Another excellent resource for those interested in learning about ESOPs is The ESOP Association of America. Its Web site is located at http://www.esopassociation.org.

Benefit Capital Inc. (BC Inc.) is a financial consulting company that has over the past three years helped assist with more than $2.5 billion in ESOP transactions? Its Web site is located at http://www.benefitcapital.com and contains a wealth of information on ESOPs.

When EHS-Alaska Inc. looked into ESOPs, it realized that its consulting experience in engineering, health and safety was not going to be of much use, according to Robert French, president. Dick Morris, of BC Inc., was brought in to facilitate EHS-Alaska Inc.'s education on ESOPs. Morris has also been assisting in the company's ongoing transformation into an ESOP. The seven EHS Alaska Inc. employees are in the process of buying out the stock held by the company's owner, Dr. Thomas B. Swearingen.

The seven new employee-owners hope to have completed the company's change to an ESOP this month. "All the employees are involved with this change by their own choice," according to French. "It's a good enough deal that everyone wants to be onboard."

"ESOPs offer a mutually beneficial way to transfer ownership to employees, and, as employee-owners, our entire team understands that our actions will have a direct affect on the success of the company," French added. "Our company focuses on doing a quality job that meets our clients' needs, and the ESOP allows us all to share in the company's success."

Morris is the real expert on ESOPs and shared his expertise on the subject: "ESOPs involve a variety of costs, but they are qualified retirement plans with great benefits. The ESOP requires an annual independent appraisal, a periodic repurchase liability...

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