Q: How many ESOPs are in the U.S.?
There are almost 7,000 ESOP plans in the U.S. The NCEO (National Center for Employee Ownership) estimates that approximately 28 million employees participate in employee ownership plans. Overall, employees now control about 8% of corporate equity.
Q: How does an ESOP get set up?
Companies set up a retirement plan trust (think of a 401(k) plan) for employees. Annually, the employer will contribute or allocate company stock directly to the plan. Contributions to the plan are tax-deductible. Employees pay no tax on the contributions. They will pay ordinary income when they retire and withdraw the value from their retirement account, just like a 401(k).
Q: What are some examples of ESOP companies?
ESOPs can be found in all kinds of sizes of companies. Some of the more notable majority employee-owned companies are Publix Super Markets (200,000 employees), Amsted Industries (18,000 employees), W.L. Gore and Associates (maker of Gore-Tex, 10,720 employees), and Davey Tree Expert (10,500 employees). Companies with ESOPs and other broad-based employee ownership plans account for well over half of Fortune Magazine's "100 Best Companies to Work for in America" list year after year.