This document discusses how to set up an effective ESOP Communications Committee. It provides an overview of different types of ESOP committees and their roles. It then discusses key considerations for establishing a Communications Committee, including its mission, structure, membership, budget, and bylaws. The document draws on examples from The Onyx Group and CTL Engineering to illustrate how they have successfully implemented Communications Committees to strengthen employee ownership culture.
Our “ESOP Business Model” presentation covers the current regulatory environment, primary benefits, transaction structuring, business valuation standards, accounting rules and other critical issues to know when considering an ESOP.
ESOP is an Employee benefit Plan which makes the employees of a company owners of stock in that Company.
ESOP is a plan to compensate, retain and attract employees.
ESOP is a contract between a Company and its employees that give employees the right to buy a specific number of the company's shares at a fixed price within a certain period of time.
It explains the basic concept of how employee stock option plan works and gives a brief about the rules governing the issuance of the same as mentioned under the Companies Act, 2013. It also mentions the rules in place which govern the issuance of employee stock option plan by a foreign company to its employees resident in India. It also explains two case studies about the issuance of ESOP by Flipkart and redbus and how sometimes employees might be cheated in the name of ESOP.
Our “ESOP Business Model” presentation covers the current regulatory environment, primary benefits, transaction structuring, business valuation standards, accounting rules and other critical issues to know when considering an ESOP.
ESOP is an Employee benefit Plan which makes the employees of a company owners of stock in that Company.
ESOP is a plan to compensate, retain and attract employees.
ESOP is a contract between a Company and its employees that give employees the right to buy a specific number of the company's shares at a fixed price within a certain period of time.
It explains the basic concept of how employee stock option plan works and gives a brief about the rules governing the issuance of the same as mentioned under the Companies Act, 2013. It also mentions the rules in place which govern the issuance of employee stock option plan by a foreign company to its employees resident in India. It also explains two case studies about the issuance of ESOP by Flipkart and redbus and how sometimes employees might be cheated in the name of ESOP.
Performance-linked compensation (PLC) is a form of payment from an employer to an employee, which is directly related to the performance output of an employee and which may be specified in an employment contract.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
Performance-linked compensation (PLC) is a form of payment from an employer to an employee, which is directly related to the performance output of an employee and which may be specified in an employment contract.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
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ITSM Academy Webinar - ITSM Adoption: The Ingredients of Success for Organiza...ITSM Academy, Inc.
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Research shows that Executives identify a gap between the competencies required by their organizations, and the skill set available within their communications team.
It has also been stated that PR agencies are challenged with the high number of applications received for entry-level positions and internships. They are looking for ways to better assess candidates and junior-level staffers, specifically for individual strengths and capabilities.
In response, the Canadian Public Relations Society is launching the first national entry level exam for the Public Relations profession. The Public Relations Knowledge Exam (PRK)™ is endorsed by the Canadian Council of Public Relations Firms and supported by Cision.
Tracey Baker, Director, Education at the Canadian Public Relations Society - National, Christine Smith, Lead Exam Developer, Public Relations Knowledge (PRK)™ Exam and Lisa Kimmel, General Manager, Edelman Toronto discuss what you should know about the exam and in entering the profession.
This session took place on October 11, 2012 in Toronto, ON.
The Arizona Center for Innovation (AzCI) provides workshops and sessions designed to help new ventures. This is an overview of how to attract and work with a team to move your technology or science-based startup in the right direction. Presented by Corey Smith. Please contact us at: www.azinnovation.com to learn more.
ESOP Committees How They Interact And Setting Up a Communications Committee-2
1. ESOP Committees – How They Interact &
Setting up a Communications Committee
The ESOP Association
2012 Las Vegas Conference & Trade Show
November 8th & 9th
, 2012
Christopher Horner, Dickinson Wright PLLC
Tom Oettinger, The Onyx Group
Ali Jamshidi, CTL Engineering
Jay Simecek, The Ohio Employee Ownership Center
1TEA November 2012
2. ESOP Committees – How They Interact & Setting up a
Communications Committee
Agenda:
Introductions
Overview of committees in an ESOP
Legal requirements
The Onyx Experience
The CTL Engineering Experience
Issues When Creating a Communications Committee
Q & A
2TEA November 2012
3. ESOP Committees – How They Interact &
Setting up a Communications Committee
…… Issues to CONSIDER
Roles
Mission / Scope
Structure
Membership / Representation
Term
Selection / Election
Budget
Meetings
Bylaws
3TEA November 2012
4. The Big Picture
Linking employee ownership to corporate performance.
• Employee ownership is not enough.
• Research indicates that employee ownership plus employee participation
leads to increased corporate performance relative to employee ownership
alone.
TEA November 2012 4
5. Common Theme
• Goals: All committees have a common purpose: to facilitate the strategic mission
of the corporation.
• Structure: All committees have a common philosophical underpinning: The
objectives of the committee should dictate its characteristics.
• Resources: All committees should have access to the resource necessary and
appropriate to achieve their objectives.
• Evaluation: All committees should be evaluated and modified to increase
efficiency and achieve new strategic objectives.
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6. What is an “ESOP Committee”?
Administrative (Fiduciary) Committee
Communications Committee
Other “ESOP Committees”
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8. Fiduciary Committee
Decision-making regarding administration of the Plan
• Operation of Plan
• Management of Plan assets
Advise the trustee of the ESOT
• Dispositions of employer securities
May be a Named Fiduciary Under ERISA
• Fiduciary duties
TEA November 2012 8
10. Communications Committee
Decision-making regarding strategic employee ownership objectives
(Authoritative)
Advise management and educate and train employee owners (Advisory)
Not necessarily subject to ERISA fiduciary duties
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11. Legally Required Communications
Summary Plan Description (“SPD”)
– Summary of Material Modifications (“SMM”)
Summary Annual Report (“SAR”)
Participant Statement
Disclose Governing Documents
– Plan Document
– Trust Agreement
– Form 5500
– Beneficiary Designation Elections
TEA November 2012 11
12. Purpose of ESOP
Communication Committees
Help implement the strategic vision of employee ownership through
communication and education
TEA November 2012 12
13. Roles:
Board
sets the vision of employee ownership
Management
leads with primary role as communicators
ESOP Communication Committee
employees involved in learning
TEA November 2012 13
14. Key Communication and Education Roles
Communicate to employees that they are shareholders with a stake in
the company’s future
Provide the knowledge and skills needed to think and act like owners
Develop processes for open communication, information-sharing and
continual learning
Lead employees to act as owners
TEA November 2012 14
15. CTL Engineering
• Headquartered in Columbus, Ohio
• Started in 1927
• Columbus Testing Laboratories
• 245 employee owners
• 100% employee owned (83% ESOP)
• Engineering and consulting services
• Telecommunications
• Security & Video Surveillance
16. CTL Engineering
Establishing CTL’s ESOP
• Eight years discussing with owner
• Company performance inconsistent
• 1990 made profit, but no cash
• Choices:
- Take a loan to pay taxes
- Create non-cash deduction
17. CTL Engineering
ESOP Solves CTL Problems
• Viable solution to owner’s tax issues
• Company stock contribution of 7% in 1991
• Another 7% contribution in 1992
• ESOP offered significant advantages
• ESOP good for all parties
Owners
86%
ESOP
14%
18. CTL Engineering
ESOP in Limbo
• Expected people to get on board
• People didn’t buy into ESOP concept
• Did little communication
• ESOP unimportant to most
• Owner was disappointed
20. CTL Engineering
Owner Options
• Management preferred ESOP purchase
• Owner unsure ESOP was “right”
• “Tire kickers” visited our facilities
• Owner looking for financial commitment
• ESOP shrinking as people left CTL
21. CTL Engineering
Owner Sells to ESOP
• ESOP became most viable option
• Outside and insiders educate owner
• Financial and business benefits
• Building ownership culture
Mgmt
17%
ESOP
83%
TEA November 2012 21
22. CTL Engineering
Initiation of Fun Czars
Created to establish a higher morale
Non-executive personnel
One goal…build ESOP spirit and enthusiasm
Main result of our efforts…turnover has decreased and
retention has increased
Formal budget submitted and reviewed annually
23. CTL Engineering
Committee Challenges
Mature ESOP
• New participants aren’t seeing the benefit
• Rebalancing should help
Multiple offices
Over half of employees are in the field
24. CTL Engineering
What’s Worked
Visiting every office every other year
New hire training
Guess the Stock Value
ESOP representatives in every branch
All events are ESOP events
ESOP month
Quarterly ESOP Advisory
25. CTL Engineering
ESOP Culture ≠ Overnight Success
• Not everyone buys in right away
• Needs consistency and repetition
• Provide ESOP information in all forms
28. CTL Engineering
What’s Worked - New
Quarterly ESOP Advisory
• Submit for a chance to win $100 American Express Gift Card
29. CTL Engineering
Fun Czars Results
Turnover decreased
Building ESOP environment/spirit
“May I speak to the owner?”
Receptionist: “You’re speaking to one.”
Think like owners
• Weathered the 2008 economic downturn
– Furloughs
– Suspended 401k Match
• No layoffs
34. Typical Mission Statement
Support success of ESOP
Support success of Company
Encourage education and understanding of ESOP by employees
Encourage and facilitate development of an ownership culture at the Company
34TEA November 2012
35. Scope of Responsibility for ESOP
Communications Committee
ESOP Communication?
Wages & Benefits?
Marketing Strategy for Company Products?
Quality Control Issues?
ESOP Newsletter
ESOP Training?
ESOP and Company Celebrations?
Annual Participant Meeting?
Company Financial Information?
Participant Voting (if pass-thru voting applies)?
Attend ESOP Conferences and local training?
35TEA November 2012
36. Structure of ESOP Committee
Number of members
Eligibility for committee membership
Term of membership
Composition of committee
Selection/Election Process
Committee Mission/Guidelines/Bylaws
Scope of Responsibility
36TEA November 2012
37. Number of Members
Odd number to avoid tie votes?
• ≤ 4 people – probably too small
• ≥ 12 people – probably too large
37TEA November 2012
38. Eligibility to Serve on Committee
All employees?
Management only? Non-management only?
Full-time employees only?
ESOP Participants only?
ESOP Participants who are at least partially vested only?
Fully vested ESOP Participants only?
38TEA November 2012
39. Term of Office
1 Year?
2 Years?
3 Years?
1 Year with re-election possible but with majority of Committee not
eligible for re-election?
3 Years with only 1/3 of committee elected each year?
Unlimited as long as person is willing to serve?
39TEA November 2012
41. Representation
on Board of Directors
No representation of Committee on Board
Committee Chair on Board automatically
Management selects Board member
Committee selects/elects Board member
41TEA November 2012
42. Committee Selection/Election
Who Conducts selection/election?
Who Counts Votes?
What are the voting hours?
Who’s eligible to vote?
1 Person 1 Vote vs. 1 Share 1 Vote
Who defines departments?
42TEA November 2012
43. Voting Methodology
Ballot
E-mail
Phone
FAX
All of the above
Raising hands at a meeting
43TEA November 2012
44. Committee Budget
Direct Expenses
• Material for events
• Registration fees for conferences/seminars
• Travel to conferences/seminars/meetings
• Newsletter costs
• Communication costs
Time spent by committee members
44TEA November 2012
45. Committee Meeting Issues
Company time vs. after-hours
Paid vs. unpaid
Frequency of meetings
Length of meetings
Priority vs. departmental work assignments
45TEA November 2012
46. Selection of Committee Chair
Elected position?
Chosen by management?
Highest level person on committee?
Selected by committee members?
46TEA November 2012
47. Typical Bylaws
Contain decisions reached re all the issues we are discussing in this program!
47TEA November 2012
48. Typical Guidelines
Detailed policies and procedures for:
• Committee elections
• Committee officer selection and responsibilities
• Committee meetings
• Replacement for a departed committee member
• Committee functions
• Committee members attending ESOP Conferences and Programs
Specification of scope of responsibility
48TEA November 2012
Editor's Notes
CTL was at a fork in the road and it was in question which way the firm would go