Background for ESE News Items

The Benefits of an ESOP company

on October 8, 2018

October is Employee Ownership month so it makes sense to post a blog on the fact that ESE is an ESOP company. Many questions surround what an ESOP company is and what the benefits are of working for or with such a company. Let’s answer a few.

What does ESOP stand for? ESOP is an acronym for Employee Stock Ownership Plan.

What is an ESOP? An Employee Stock Ownership Plan enables employees to own stock in the company that employs them. It sets up a trust that gives employees this opportunity and is often used by business owners to sell the company to its employees in a way that benefits all parties financially.

Employees receive a company-funded retirement plan and are employee-owners. This creates a “think and act like owners” culture and is why you’ll often hear ESE describe our employees as team members or employee-owners. This set-up offers financial and tax benefits to the business and protects the company through a trustee, who acts in the best interest of the employees.

How does this benefit ESE customers? The fact that ESE is an ESOP benefits our customers because of the culture shift that occurs. This change in culture (employees are more motivated because they are part-owners) results in employee-owners who perform better than a non-employee owned company. Since employees’ performances on a daily basis contribute to the overall company goals – which increases the value of the company and their stock price – employees are motivated to provide quality service. The National Center for Employee Ownership shows that companies that combine ESOPs with an “ownership culture” grow 6% – 11% per year faster than would have been expected.

What is the history of ESE as an ESOP? Mark Weber, the founder of ESE, wanted to retire and give the business to the employees instead of selling or merging with an external party. ESE first became a partial ESOP, but over time, ESE became 100% employee-owned. ESE is now able to share the success of the company’s future with employees, which is an additional benefit to recruit and retain quality employee-owners.

As an employee or potential employee, what are the specific benefits for me? Within an ESOP, individual performance drives company success. This leads to individual rewards with the distribution and value of stock. This added level of ownership makes employees more invested and leads to a stronger bonding with the team around them. Additional benefits include:

  • Higher level of job security
  • Higher level of “standard” benefits
  • Each employee has the right to vote according to their stocks during a shareholder vote
    • Examples would include the sale of the company, liquidation or corporate merger

For more information on ESOP’s and how they work, visit The ESOP Association’s website which offers numerous resources.

Share this post:
eseincThe Benefits of an ESOP company