norman
country-financial
March 29, 2024 5:45 am
Your hometown Newspaper since 1987.
Search
Close this search box.

LETTERS TO THE EDITOR

LETTERS TO THE EDITOR:
SEND A LETTER TO THE EDITOR
ESOP Opinions Continued
To the Editor:
I am saddened by Mr. Starita’s unpleasant experience with an ESOP (Opinions About ESOP Plans: May 28, 2008)) The plans Mr. Starita mentions were called “rescue” ESOPs, and he is correct that some companies that have had employee ownership did not do well. However, it was not employee ownership that caused these trucking companies’ demise. The trucking industry and the unions attempted to save the companies in a very severe economic climate by asking the employees to participate in the turnaround and the companies’ rescue. Those 3 he mentioned did not do well. Undoubtedly there are others. Of the tens of thousands of ESOP and stock plans, less than 1% do not end favorably. Also, only about 2% of all plans require an employee to “give back” pay. Further, frequently the highly paid executives of a company have limited participation in the ESOP with the majority of the benefits going to employees.

It is most unfortunate that factors outside of employee ownership, such as negative economic conditions and downturns in world markets cause businesses to fail, in spite of everyone’s hard work.

The vast majority of employees have different results. Independent studies by world class universities confirm that. For an example of such studies, go to http://www.benefitcapital.com/NCEOWriteUp.html. This online summary outlines the Rutgers University study, the largest and most significant study to date of the performance of employee stock ownership plans (ESOPs). The Rutgers study conclusions are overwhelmingly positive. For lists and discussions of many others, Chapter 3 of Employee Stock Ownership Plans: ESOP Planning, Financing, Implementation, Law and Taxation has a comprehensive history of most of the independent studies and their result. The National Center for Employee Ownership website also has many references to sound and verified research (www.nceo.org).

Congress has passed over 25 pieces of legislation favoring employee ownership. Five regulatory agencies have oversight authority on all of these plans. It is against the law to abuse these plans, and there are less than ten documented cases of “stealing” from these kinds of plans in 25 years and even then the fidelity bond that is required for these plans made the losses whole.

Mr. Starita expressed his concerned comments. I wish that his experience with ESOPs could have been as positive a force as most employee ownership has been in America.

Robert W. Smiley, Jr.
Posted May 28, 2008

Tell Us What You Think
To send a letter to the editor by email, click here: EMAIL US
Back

Print This Article:

Share This Article:

Leave a Comment

Your email address will not be published. Required fields are marked *

Screen Shot 2023-02-05 at 10.55.46 PM
2-21-2024-fullpagefair
4 Youth Service WEB
2-28-2024 WEB Hole Foods St Patricks
No data was found
2023 WEB BANNER 2 DEFAULT AD whitneyswater
Mesquite Works Web Ad 10-2020
Scroll to Top
Receive the latest news

Subscribe To Our Weekly Newsletter

Get notified about new articles