ESOP Communication Milestones

Transcription

1 ESOP Communication Milestones Session 2C Karen Ellis and Nicole Calamaio Who am I/What s My Story?! Karen Ellis, VP of HR, Director, Past Trustee, Member of ESOP Admin Committee Immediate President of CA/WS Chapter of ESOP Assoc. Many Milestones Over the Years Recently a son who graduated from high school and another who has his drivers learner s permit! At work, we just celebrated our 50th year in business 25 of those as an ESOP And we currently assumed a bunch of new debt to build a state of the art processing facility opening October 1 st 1

2 Who is Superior Farms? BEST lamb processor/distributor in the U.S. Founded in 1964 in Ellensburg, WA Opened our Dixon, CA plant in 1981 Became 100% employee owned in 1991 In 1995, Superior purchased the Denver harvest plant and new employees began participating in the ESOP In 1997, Superior acquired Boston, Lamb & Veal, taking on new debt, created new shares and new participants in the ESOP In 1998, ESOP shareholders voted Sub S Status In 2000, Superior acquired Mountain Meadows Lamb Co. in Denver, CO assuming additional debt and adding 150 participants to the ESOP In 2010, Superior acquired Iowa Lamb Co., Iowa and Grove Meat Co. in Illinois In 2016, final acquisition loan is repaid with no new shares. Enacted a new 3% annual stock contribution. 430 employees 918 ESOP plan participants Who am I/What s My Story?! Nicole Calamaio, Director of Total Rewards Joined Sundt Construction in April 2014 Celebrating our 125th anniversary this year!! ESOP was formed in 1972, and we became 100% Employee Owned in ,300 employees working at offices (AZ, CA, TX) and project sites across the country 2

3 Definitions of Milestone Milestone A significant event or stage in the life, progress, development, or the like of a person, nation, etc. Becoming an ESOP was a milestone for our companies. When we think we have reached a milestone something else happens. Milestones of an ESOP Company Formation of the ESOP Becoming 100% Employee Owned New Hire Orientation Becoming Eligible Becoming Vested Receiving the Annual Statement Annual Share Price Reveal October Celebrating Employee Ownership Month Getting that First Politician Visit! ESOP Anniversaries Other Annual Events/Communications Changes in Leadership Changes to the Plan Diversification/Benefit Distributions Loan Repayment/Haves and Have Not's 3

4 Becoming an ESOP Communication can be complex and complicated but your message depends on your situation. Why did you become an ESOP? What do you intend for the ESOP to be? Begin with the end in mind.. And remember You must build a credible foundation so DWYSYWD is critical! Defining Ownership Remember People See Things Differently. 4

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6 How Superior Farms has Defined What an ESOP is Our ESOP has been described over the years as: A benefit plan A scam Complicated A retirement plan A tax dodge A capital structure A succession plan A cash out/exit strategy for current owners A GIANT pain in the XXX! A transitional state to something else A way of life Best thing EVER! Begin With the END in Mind! How do you really want to define ownership? How do you define the role of an employee owner? Owner vs. Renter Old House Analogy Owner s paint, cut the grass, join neighborhood governance associates Renters, less so short term who cares, its just a rental! Is the ESOP a tool for improving co. performance? Or, simply a retirement plan? How will ESOP ownership connect with business strategy & corporate objectives? What information don t we want to share and why? 6

7 Communication Issues We assumed Doesn t making our employees owners through an ESOP translate automatically into a feeling of ownership? What are our expectations? To provide employees with a stake in the Company? Or to simply provide employees with a retirement benefit, nothing more/nothing less 3 Stories You re an owner, shut up and get back to work. You re an owner, we expect more now. We ve already got a great culture, ownership is the missing link, icing on the cake. BUILDING TRUST Be Honest, No Smoke & Mirrors ESOP s can be hard to understand. Explain it in as plain terms as possible. Tell them what it is and what it isn t. Remove legalese it can be very intimidating and employees feel there is something hidden in the fine print. Tell them how they can impact it. Tell them how they can benefit from it! Be consistent don t change the message. 7

8 New Hire Orientation Conduct Sundt 101 orientation at Corporate HQ every month All Professional employees are required to attend within first 90 days of employment One session is solely focused on the 401(k) and ESOP History of Sundt s ESOP and growth of stock Sundt s balances compared to average balances of other ESOPs Average balances after 5 and 10 years of participation with and without 401(k) participation Types of contributions Dividends ESOP Calculator WEALTH CREATION Eligibility Example Hire Date Eligibility is based on your hire date: Anniversary Date: Complete 12 months including 1,000 hours: Eligible to Participate 10/1 thru 9/30 Complete 1,000 hours: Earn Discretionary Contributions ESOP Contribution Date Complete 6 months including 500 hours: Eligible for 401(k) & ESOP matches ESOP Contribution Date June 2015 June /1/15 9/30/16 Plan Year /30/2016 1/1/16 9/30/16 Plan Year /30/2016 July 2015 July /1/15 9/30/16 Plan Year /30/2016 2/1/16 9/30/16 Plan Year /30/2016 Aug 2015 August /1/15 9/30/16 Plan Year /30/2016 3/1/16 9/30/16 Plan Year /30/2016 Sept 2015 September /1/15 9/30/16 Plan Year /30/2016 4/1/16 9/30/16 Plan Year /30/ KEEPING YOUR RETIREMENT GOALS ON TARGET 8

9 Becoming 100% Vested Once an employee becomes 100% vested, Sundt sends their manager a sticker to present to them for their Hard Hat Becoming 100% Vested Superior Farms includes a distribution on vested employee s regular paychecks that is based off of their vested account balance. Employees see an additional line item of earnings on their paycheck with the word ESOP to help keep it in their line of sight. Some companies give their employees a logo vest when employee s reach this important milestone! How do you celebrate vesting? 9

10 Annual Statements/Annual Share Price Sundt s CEO communicates the share price in writing and at Town Hall meetings Annual statements are mailed home and include information on How to Read your Statement Considering giving Annual Statements to supervisors to present especially to those who are receiving their first statement or for those who haven t fully vested Annual Statements/Annual Share Price Superior Farms conducts Town Halls to announce share value. Also sends out a company wide announcement. Can play games Guess the Share Price Annual Shareholders Meetings/Picnic. Can include families Statements are mailed to homes. Some companies also make this a very big event when annual statements come out. Must balance the good news with the bad when determining how you wish to launch your program! 10

11 October Employee Ownership Month This can be an excellent time to spearhead your communication efforts. There will be sessions dedicated to this very subject and communications fair shows many great ideas. Superior Farms does something weekly at each location utilizing many of the ideas we have gained from here. We have to find balance between having fun and educating. It s not as easy as it sounds! The National ESOP Association website has tool kits and communication ideas available as well. Utilizing the annual ACE Poster winner is a nice way to publicize and jumpstart the month! What has worked? Different Messages for different audiences. Involving those invisible leaders throughout the departments. Integrating every day actions into ownership concepts. Being honest taking it down to a level that they can understand. Asking simple questions what is important? Food! Give Aways! Raffles! KISS WIIFM??? Canoe Theory TQM Training/Education 11

12 Getting that First Politician Visit! There are many things that make ESOP s great for employees and for companies We may not see it, but there is always legislation being proposed that can either support or hurt ESOP s. Our Association leads political efforts to ensure ESOP s remain strong. The National ESOP Association has a lobbying kit available to those who are interested in ensuring that your representatives know that you are an ESOP and how important it is to the constituents in their area! Hosting your Senator or Congressman is a great way to gain awareness, acceptance and participation from your employees and promote your company, product or services! Ongoing Communications Sundt launched an educational communications effort in 2014 Quarterly ESOP Focus 11x17 double sided newsletter mailed to employees homes and aimed at employees and their families Includes stories from current and retired Employee Owners about how the ESOP has personally impacted them Monthly Educational Articles One page Q&A posted on our Intranet about the mechanics of the ESOP Topics included distributions, the annual valuation process, diversifications and similar topics Conducted an Employee Owner survey through the NCEO in 2014 to better gauge ESOP understanding and communication needs 12

13 Changes in Leadership Does your new leader support the ESOP? Does your new leader understand the ESOP? Did the Board of Directors make this a key factor in their screening and hiring decision? Let the Leader find their own voice. Help support and educate the leader. Must Be Authentic. Must create the vision. Must state what they stand for. Must model the way. Must encourage the heart. Inconsistencies breed mistrust and fractures. You won t get traction. Employees are not easily fooled and quickly sense the say one thing/do another. Changes to the Plan Sundt recently changed its contribution and dividend strategy The dividend rewarded long service employee owners, but we needed to recruit talent by providing larger contributions Increased the amount of contributions and decreased the amount of the annual dividend Providing models to employee owners, showing the short term and long term impact to them, is KEY!! 13

14 Changes to the Plan There are some changes that CAN be communicated and others that MUST be communicated! Ask your TPA or attorney if you re unsure. Changes to the SPD, Distribution Policies, Vesting, etc. may require a special notice. It s funny how no matter how much we communicate some won t hear until they are at the window for payment or retirement! Then they get the message! Diversification/Distributions Preliminary and Annual Notices are mailed within 90 days of the end of the plan year. For Superior Checks cut by October 31st. For Sundt Checks cut by March 31st. Sundt added to the Plan the ability for those age 65 with 5 years of service to diversify (in addition to the standard 55/10) We have also found that information is more quickly and accurately remembered when it is first presented in the form of an example or story. When others hear or read a story about someone with whom they can identify, they are much more likely to see themselves doing the same thing. 14

15 Show me the MONEY!!! OPPORTUNITIES! The theory of Employee Ownership WORKS! We must believe and find a way to effectively communicate this to our employees. Never give up! Always keep trying! Be prepared to change, adapt, listen and keep an open mind. Find others who believe. Take a partner, ask for help. Find ways to communicate on the participants terms. Celebrate the small success on your journey! 15

16 Thank you!! Karen Ellis, SPHR VP HR & Corporate Development Superior Farms 1480 Drew Avenue, Suite 100 Davis, CA work Nicole Calamaio Director of Total Rewards Sundt Construction 2620 S. 55 th Street Tempe, AZ work 16