Washington, D.C.– In response to the introduction of the Promotion and Expansion of Private Employee Ownership Act (S. 1589) by Senate Finance Committee members Pat Roberts (R-KS) and Ben Cardin (D-MD), the Employee-Owned S Corporations of America (ESCA) released the following statement from Chairman Denny Scott:
“On behalf of ESCA, I commend Senators Roberts and Cardin for reintroducing their bill promoting ESOP ownership in the 115th Congress. With today’s introduction of S. 1589, we have great hope that more employees will reap the enormous benefits of being owners of their companies through ESOPs – benefits like heightened job stability and substantially greater retirement savings that the middle class is sorely in need of.
“As Senators Roberts and Cardin’s legislation reminds us, the S corporation ESOP model is a proven path for workers to share in their companies’ successes. Today, over 800,000 employee-owners at S corporation ESOP companies across every major industry reap the benefits of employee ownership through an ESOP. More workers should have this unique opportunity, and S. 1589 would make that opportunity real.
“The Senate bill is similar to H.R. 2092, which was introduced by House Ways and Means Committee members Dave Reichert (R-WA) and Ron Kind (D-WI) in April, and will encourage S corporation transitions to an employee ownership model. Indeed, today’s baby boomers own 1.6 million American companies, nearly half of all private businesses in the U.S., many of which are small private companies. As baby boomers retire at increasing rates, this legislation allows them more opportunity to look to the S ESOP structure to secure the future of their businesses, their employees and their communities.
“We applaud the bipartisan efforts of Senators Roberts and Cardin, as well as original cosponsors Senators Tammy Baldwin (D-WI), Roy Blunt (R-MO), Sherrod Brown (D-OH), Maria Cantwell (D-WA), Bob Casey (D-PA), Susan Collins (R-ME), Mike Crapo (R-ID), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Chuck Grassley (R-IA), Johnny Isakson (R-GA), Amy Klobuchar (D-MN), Jerry Moran (R-KS), Gary Peters (D-MI), Rob Portman (R-OH), James Risch (R-ID), Debbie Stabenow (D-MI), Jon Tester (D-MT), John Thune (R-SD), and Sheldon Whitehouse (D-RI), who continue to champion S ESOPs. We are eager to see this commonsense legislation advance, and look forward to continuing to work together with policymakers across the aisle in both Chambers to see the measure enacted this Congress.”
Details About S ESOPs
An employee stock ownership plan (“ESOP”) is a qualified defined contribution plan that provides a company’s workers with retirement savings through their investments in their employer’s stock, at no cost to the workers themselves. The over 3,000 S corporation ESOPs in the United States have distributed more than $38 billion in retirement savings over the last 12 years.
Earlier this year, Matrix Global Advisors researcher Alex Brill released a report showing that S ESOPs are a viable but underused exit strategy that provides greater economic returns to workers and communities than other exit options, including mergers and acquisitions, private equity buyouts, and initial public offerings (IPOs).
Additionally, ESCA released a survey by John Zogby Strategies that finds employees who work at private, employee-owned companies are more confident about their jobs and less anxious about their financial futures than other workers.
Details About The Legislation
The Promotion and Expansion of Private Employee Ownership Act (S. 1589) includes the following provisions:
• Incentivize owners of S corporations to sell their stock to an ESOP;
• Provide needed technical assistance for companies that may be interested in forming an S ESOP;
• Level the playing field between S and C ESOPs;
• Ensure small businesses that become ESOPs retain their SBA certification; and
• Affirm the importance of preserving the S ESOP structure in the Internal Revenue Code.
The Employee-Owned S Corporations of America (“ESCA”) is the Washington, D.C. voice for employee-owned S corporations. ESCA’s exclusive mission is to preserve and protect S corporation ESOPs and the benefits they provide to the employees who own them. These companies have an important story to tell policymakers about the tremendous success of the S ESOP structure in generating long-term retirement savings for working Americans and their families. ESCA provides the vehicle and the voice for these efforts, representing employee-owners in every state in the nation. Learn more at esca.us.