Press Release


PHILADELPHIA – October 3, 2008 – With more than 10 million U.S. workers in employee ownership plans, pending legislation, and comments circulating from both presidential candidates about these arrangements, business executives, business valuation experts and attorneys need to understand the realities of structuring ESOPs.


Senator McCain recently wrote to the ESOP Association saying how “extremely rewarding” and motivational it is for employees to participate in employee stock plans.  “About 90 percent of ESOPs are in small businesses with less than 500 employees,” he wrote.  Small, entrepreneurial businesses that are “often unable to match the substantial health care and other benefits that are normally provided by major corporations, due to the cost, are able to provide employees increased retirement benefits and stable employment because of ESOPs,” Senator McCain wrote to the ESOP Association, adding that he endorses efforts to “learn from the successes of ESOP companies and see how their positive impact can be expanded.” 


The Employee Ownership Foundation just posted a 2005 letter from Senator Barack Obama, commenting on the Employee Stock Ownership Plans Promotion and Improvement Act, in which he lauded the “valuable role” ESOPs play in the economy and how they “provide incentives for employees to improve the performance of a company.”  Senator Obama added, though, that “concern is growing about the potential downside of ESOPs” in cases where the value of an ESOP company fails to increase.  In extreme cases of company failures, he said, “the loss to employees could be significant.”  The legislation, now S. 1322, proposed by Senator Blanche Lincoln, has been referred to the Senate Finance Committee.


Along those lines ESOPs have been in the news with the New York Times calling attention to the impact on employees participating in the ESOP at Fannie Mae, although the paper added that workers have felt financial pain more from stock and options outside retirement plans. 


Clearly there is a great deal to understand about the realities of these important and complex arrangements. 


Uniquely qualified to help educate professionals on the subject, Indiana State Treasurer Richard Mourdock will share his insights during an October 14 teleconference titled “Employee Stock Ownership Plans: Legal, Business & Governmental Strategies.”   


Treasurer Mourdock came to his post with experience in ESOPs, and has launched an initiative to encourage establishment of the plans in his state.  “ESOPs have a clear track record of creating wealth, encouraging entrepreneurial attitudes and increasing productivity,” Mourdock said.


The Treasurer will be joined by two other experts to provide business valuation and legal insights into these plans. Mike Hartman is a principal of Willamette Management Associates, a national economic analysis firm, and Stephen D. Smith who, as part of his dedicated ESOP practice since 1984, has been responsible for structuring more than 175 ESOP transactions.  Smith is with the law firm of Krieg DeVault LLP in Indiana.


“This is a truly unique set of perspectives on ESOPs,” said Tom Hagy, publisher of BVR Legal, host of the call.  “Mourdock, Hartman and Smith will provide an overview of the falsehoods and realities of these plans, as well as to offer insights into their structure and tax benefits.  The panel will offer guidance on risk management, drafting transaction fairness opinions, and ensuring compliance.”  The panel will field questions from callers as well.


BVR Legal, a division of Business Valuation Resources LLC, is an education and information company serving attorneys and business experts in complex deals and disputes involving businesses and related assets.   More information about this event can be found at  Click on “Teleconferences & Webinars.”