In an ESCA-commissioned Alex Brill paper, Brill discusses the importance of regulatory certainty for S ESOPs. “In the case of ESOPs,” Brill says, “regulatory uncertainty creates burdens and risks that can discourage employee ownership and hamper employee- owned businesses.” He notes that these burdens include increased “activity by plaintiff attorneys and higher costs associated with ESOP transactions, and less economic incentive for a business owner to pursue an ESOP.” The study was the subject of an op-ed (see below) by former Ways and Means members Ron Kind (D-WI) and Erik Paulsen (R-MN), published in The Hill, a publication widely read by Members of Congress, congressional staff, and policy and political professionals in Washington, D.C.
In the op-ed, Kind and Paulsen explain how S ESOPs provide workers with exceptional retirement benefits and security, and they highlight the Brill report to help answer the question, “Why don’t more people have the chance to work for an ESOP?” As they argue, the lack of clear and workable ESOP rules has been bad for the economy and the creation of new ESOPs, and the U.S. Department of Labor (DOL) has an opportunity now to provide regulatory certainty and support the S ESOP community. This is especially timely as we continue to engage DOL as they begin the formal rulemaking process to produce draft ESOP stock valuation guidance later this year.