top of page

269: Planning an ESOP Statement Annual Meeting

The EsOp Podcast with Bret Keisling: Planning an ESOP Statement Annual Meeting

Bret Keisling shares the "Do's and Don'ts" of planning an ESOP Statement Annual Meeting, which besides Employee Ownership Month is the best way to celebrate, educate, and motivate a company's employee owners. ESOPs are required by law to value the company annually and to provide account statements to every employee owner.  


Companies should consider turning the share value announcement into an event. Besides comments from the CEO or other top management, consider inviting the trustee, valuation advisor, third party administrator, and ESOP lawyers, as well as members of the company board of directors and possibly even elected officials.  Bret also shares what to do if there's a decrease in value.


Bret would love to speak at your ESOP statement annual meeting either in person or remotely.  Schedule a free no-obligation conversation here.

... or watch the video below.


Episode 269 Transcript

[00:00:00] Bitsy McCann: Welcome to The EO Podcast with Bret Keisling, part of the EO Podcast Network.

[00:00:12] Bret Keisling: Hello, my friends. Thank you for listening. My name is Bret Keisling and, as it says on my business cards, I'm a passionate advocate for employee ownership.

[00:00:21] There are a couple of times a year that present a wonderful opportunity for employee-owned companies to bring the entire team together in what can be highly motivating experiences. The first, which we talk about and celebrate every year, is Employee Ownership Month. Held each October, Employee Ownership Month is recognized by everyone in the U. S. as a chance to celebrate, educate, and motivate. It's also a great time to share your employee ownership accomplishments throughout your business networks, including clients, suppliers, and the community at large.

[00:00:54] To be sure, social media is filled every October with so many great posts from employee-owned companies.

[00:01:00] Besides Employee Ownership Month, there's another great opportunity to bring everybody together, and that's the time that annual statements are distributed in ESOPs.

[00:01:10] As you know, ESOPs are required by law to be valued on an annual basis and statements be sent to every ESOP participant. The annual statements include, among other things, the new share price, the participant's total number of shares including allocations from the previous year, the total current value in the participant's account, and change from the previous year.

[00:01:32] Now, to be clear, the law only mandates that the valuation be performed and statements sent to every participant. If this is all you do, you're complying with the law. But you're missing a great opportunity to motivate the team and create company-wide camaraderie.

[00:01:48] I've been fortunate in my career to participate in and speak at a lot of annual statement meetings. These can range from a very basic pizza party to bigger events. When I was a trustee, I had clients that had barbecues as well as pizza parties, gathering at minor league baseball or hockey games, and a client that pretty much recreated Oktoberfest with a lot of adult beverages and live entertainment.

[00:02:13] What's important when deciding what type of party it is, is to make sure that it's out of the ordinary. I know plenty of ESOP companies that have monthly or quarterly pizza parties, for example. It's great if they do that, but rather than just have the annual statement be an extension of regular programming, do something to step up the gathering.

[00:02:32] Where possible, it's ideal if the statement meeting can be attended by all of the employee owners. But where that's not possible because of the size of the company or multiple shifts, etc., it's important to duplicate the event so everyone can participate.

[00:02:46] Some years ago, I shared a client with Jim Bado of Workplace Development. The company wanted us to present at their annual meeting. The challenge was that there were approximately 150 employee owners spread out over three shifts. So, I remember Jim and I doing our presentations three times that day. At 6 AM for the end of the 3rd shift, around noon in the middle of the first shift, and late afternoon for the beginning of the 2nd shift.

[00:03:10] If companies have multiple locations, possibly physically bring folks in for the meeting. But at minimum, have them attend remotely by Zoom, for example, and make sure if there's food and drinks at the main event, that the satellite offices have them too. It's really hard to stress that we're all in this together while leaving out certain groups.

[00:03:30] Use this opportunity to hand out awards celebrating individual or team accomplishments. And don't forget to celebrate milestones. For example, someone becoming fully vested or achieving a 5, 10, 15, or 20 year anniversary, etc.

[00:03:44] Something else that I don't see nearly as often as I would like, is the presence and/or participation at the annual meeting of members of the board of directors. All too often employee owners don't get to interact with board members, and conversely, board members miss the opportunity to receive input from the employee owners. Mindful that the board of directors has a fiduciary duty to act in the best interest of the shareholders and that the employee owners are the shareholders, having opportunities to interface with employee owners, to me, helps satisfy the fiduciary duty board members have to them.

[00:04:19] Similarly, I believe it's important, where possible, to have your trustee attend these meetings. When I was a trustee, I made it clear to my clients that I really wanted to attend annual meetings and my partner and I never charged for our time in attending the meetings; just travel expenses, if any. I was always proud of the fact that often times employee owners would recognize me when I was on site. If not by name, they at least recognized me as "the trustee." The trustee's presence reinforces the prime responsibility of the trustee: to act in the best interest of the participants, a. k. a. the employee owners.

[00:04:54] Here's a couple of do's and don'ts for the business portion of the statement meeting. Do reveal the new share price. Don't have the employee owners open their annual individual statements at the meeting. The share price applies to everyone, the individual statements do not. Just as I'm not in favor of publicly announcing individual salaries, it's not a good idea to announce individual share balances as well.

[00:05:16] Have several presentations as part of the event. I like to see the CEO give what is essentially a state of the union talk for the company. In concert with the share price reveal, talk about what went right in the last year and what didn't. Talk about priorities, opportunities, and risks for the coming year. Talk about what the company is doing right and what it could be doing better. But for goodness sakes, remember, even challenging news can be shared in a positive way. If the company has had a challenging year, this meeting is an opportunity to discuss the plans moving forward, which should not include finger pointing or brow beating.

[00:05:51] Remind the participants that whether the share value went up or down, it's nothing but a scorecard of sorts unless you're ready to retire in the coming year. After all, if you won't reach retirement age for 10 or 15 years, this year's share price is a good indicator of performance, but has no actual effect on someone's retirement.

[00:06:10] I think it's a great idea to have some of your experts present as well. As we know, the technical aspects of ESOPs can be complicated. I like having the third party administrator appear to explain the statements, vesting, diversification, and distributions. Remember, this can be an overview. It doesn't have to be a deep dive.

[00:06:29] Having the trustee's valuation advisor attend and speak is also a great idea. A brief look at what goes into the ESOP valuation and what doesn't goes a long way to giving credibility of the process to the employee owners. Consider having the ESOP lawyer attendant perhaps say a few words about the role of the lawyer or perhaps give highlights of any significant legal or regulatory changes that may have occurred or be under consideration. And certainly with your board of directors in attendance, a few words from the board chair or other board representative would certainly be in order.

[00:07:01] Your ESOP may have other advisors, whether they're specifically ESOP advisors or not. For example, marketing advisors that you may want to include as well. Figure out who is important to your company, and who the employees will benefit from meeting and hearing from, and include them.

[00:07:16] By the way, when I talk about including the trustee, third party administrator, valuation, and ESOP lawyer, you can rotate from year to year how much time each is given to speak. All should be introduced, but for example, if this year you hear a little bit at length from the Valuation Advisor, next year allow the Third Party Administrator to speak at length. Although the information is very important, don't overwhelm employee owners with hours of potentially dry information.

[00:07:42] Always include an opportunity for questions and answers, both as part of the actual meeting, but also letting the employee owners know they can approach all of the advisors individually for those who prefer not to speak in front of everyone.

[00:07:54] Finally, and this is where I might be able to help you, is consider bringing in a speaker specifically designed to motivate and celebrate the employee owners. In my work through the podcast, I've been invited to appear both in person and remotely as sort of a cheerleader for employee ownership generally, and the company specifically.

[00:08:13] I like to discuss how the employee-owned company is an important part of their community and its economy. I also like to share my view of how the employee owners fit into the broader employee ownership movement and distinguish the benefits of employee ownership, particularly contrasting the advantages of being employee owned over their non-employee owned competitors.

[00:08:34] In short, I'm a cheerleader for employee ownership, and that comes through in my presentations. If you'd like to talk about what I can bring to your annual statement meeting, reach out! I'd love to talk to you. We'll include a link in our show notes to my calendar where you can schedule a brief, no cost, no obligation chat with me. Since 2017 through the podcast, I've perhaps done more talking about employee ownership than anyone else, and I'd love to do a presentation tailored specifically to your company.

[00:09:03] I hope this encourages you to consider planning your annual meeting in a way that will create motivation and enthusiasm and to celebrate your employee owners and your company.

[00:09:12] With that, we'll wrap up this episode of the podcast. Thank you so much for listening. This is Bret Keisling. Be well.

[00:09:20] Bitsy McCann: We'd love to hear from you. You can find us on Facebook at EO Podcast Network and on Twitter [X] @EsOpPodcast. This podcast has been produced by Bret Keisling for the EO Podcast Network. Original music composed by Max Keisling. Branding and marketing by BitsyPlus Design. And I'm Bitsy McCann.


Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.


bottom of page