Did you know Indiana-based GMI Corporation is an ESOP (Employee Stock Ownership Plan) organization? You can always recognize an ESOP company by the proud display of the ESOP logo.
What is an ESOP?
ESOP’s offer an opportunity for the business owner to sell all or part of the company to the current and future employees as opposed to a competitor or outsider.
ESOPs were originally formed in 1956 and have become a popular means of business succession. Currently, there are over 10 million employee-owners making it larger than any union in the private sector. The teacher’s union and UAW (united auto workers) combined do not equal even half of the amount of ESOP employee-owners.
Historically, there have been several very large ESOP organizations, including Chrysler, United Airways, and Publix. Additionally, several large corporations have sold off divisions of their operations to employees as a means of divesture and saving jobs including Nucor Steel, Weirton Steel, and recently Bob’s Red Mill.
Ownership Culture
There is more to being an ESOP than just a business structure. An ESOP organization becomes a new culture within – an enhanced culture. Within an ESOP, unlike other organizations, vested employees participate, through their work, in helping to increase the share value of the company and build equity for their future. Being an employee-owner, as opposed to being an employee of a different corporate structure, encourages more personal participation in the decisions made daily.
Culture benefits include:
- financial security
- insight into the company’s performance
- differentiator from competitors
- helps all strive to do their jobs with excellence
- an enticing benefits package to attract and retain talented team members
- heightened performance and team member commitment
ESOP Benefits for Employees
An ESOP can provide an employee with additional retirement assets. The ESOP is generally designed to benefit employees who remain with the company. The company also gets the benefit of tenured, experienced, employees. Stock is allocated to each employee’s account based on a contribution by the company, the employee bears no cost for this benefit.
Employees are not taxed on amounts contributed by the company to the ESOP, or stock appreciation earned in that account, until they receive distributions. There may be several options for the employee to continue deferring taxes at that time.
ESOPs are a win-win for employee and the company alike.
Ready to explore working for an ESOP organization? Learn more about the vibrant culture of GMI and browse current job openings here.
