Washington, D.C. – In response to the introduction of the Promotion and Expansion of Private Employee Ownership Act (H.R. 2092) by U.S. Representatives David Reichert (R-WA-08) and Ron Kind (D-WI-03), the Employee-Owned S Corporations of America released the following statement from Chairman Denny Scott:
“We applaud Reps. Reichert and Kind for introducing H.R. 2092 today. This legislation is an important step in expanding employee ownership and extending its numerous benefits to more hardworking Americans across the country.
“The S corporation ESOP model is a tried and true approach to ensuring workers can share in their companies’ successes. Today, nearly half a million employee-owners at S corporation ESOP companies, across every major industry, reap the benefits of employee ownership. In fact, S ESOPs increased employment by 60 percent from 2001 to 2011, outperforming their peers in the private sector.
“H.R. 2092 will encourage additional S corporation transitions to an employee ownership model, which means additional growth, enhanced retirement security, and reduced wealth and wage inequality.
“We are proud that Reps. Reichert and Kind, as well as original sponsors Rep. Pat Tiberi (R-OH-12), Rep. Erik Paulsen (R-MN-03), Rep. Richard Neal (D-MA-01), Rep. Earl Blumenauer (D-OR-03), and Rep. Bill Pascrell (D-NJ-09), continue to champion S ESOPs. We look forward to continuing to build bipartisan support for this popular bill to support their efforts to pass this legislation 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. With over 3,000 S corporation ESOPs in the United States, these businesses have distributed more than $30 billion in retirement savings over ten years.
Last month, Matrix Global Advisors researcher Alex Brill released a report showing that S ESOPs are a viable but under-used 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).
Details About The Legislation
The Promotion and Expansion of Private Employee Ownership Act (H.R. 2092) includes the following provisions:
- Incentivize owners of S corporations to sell their stock to an ESOP;
- Encourage the flow of bank capital to ESOP-owned S corporations;
- Provide needed technical assistance for companies that may be interested in forming an S ESOP;
- 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, DC 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. ESCA represents employee-owners in every state in the nation. More at esca.us