We recently took a look at the importance of Identifying your Long-Term ESOP Objectives as part of the ESOP Repurchase Obligation process.  Another important part of the process is developing your forecast assumptions.  While any first attempt at preparing assumptions is better than not making an attempt at all, it is essential to continuously revisit the assumptions to ensure that they are accurate.  If you don't use accurate assumptions in your forecast, then you won't have an accurate repurchase obligation forecast.  In other words, garbage in, garbage out. 

In Schmalz v. Sovereign Bancorp Inc., No. 2:08-cv-0085 (E.D. Pa. 4/17/12), a U.S. District Court applied the Moench Presumption of Prudence For Investment in Company Stock in ESOPs and dismissed the related claims. 

The president of The ESOP Association J. Michael Keeling provided some commentary on the DOL Re-Proposal of the DOL Regulation to Change the Definition of ESOP Fiduciary: 

Last week we provided an Update on ESOPs and Corporate Tax Reform.  On April 20, 2012, the ESOP Association submitted a statement to the House Ways and Means Committee hearing on the Tax Reform and Tax-Favored Retirement Accounts that briefly reviewed the Findings of 2010 General Social Survey (GSS):

At this week’s NCEO Annual Employee Ownership Conference in Minneapolis I will be leading an expert ESOP Repurchase Obligation Roundtable discussion on ESOP Repurchase Obligation Forecasting.  We will answer questions about the forecasting process and share some best practices.  Today’s post will focus on an ESOP Repurchase Obligation best practice that will set the tone for the entire process: 

The March 15, 2012 Employee Ownership Update is online and discusses the following:  

ESOPs, like other qualified retirement plans, define compensation in the plan document for purposes of allocating contributions, determining deduction limits, and nondiscrimination testing.  Depending on your plan design, you may have multiple definitions of compensation for different plan purposes.

When we covered President Barack Obama’s 2010 tax reform panel, we discussed the likelihood that Congress would consider tax laws related to employee stock ownership plans (ESOPs) as "tax loopholes" and include them in their efforts to "fund" a reduction in the overall corporate tax rate. 

ESOPs, like other qualified retirement plans, will define compensation in the plan document for purposes of allocating contributions, determining deduction limits, and nondiscrimination testing.  Depending on your plan design, you may have multiple definitions of compensation for different plan purposes.

The ESOP Association has announced the 49 Silver ESOP Award Winners of 2012: 

The establishment of an Employee Stock Ownership Plan is a key strategic initiative for a company.  However, employee ownership must be more than just words on paper, or numbers in a spreadsheet.  The most successful employee owned companies set their goal of becoming the best in their industry by creating a strong organizational structure based upon the trust, teamwork, and expertise of the employees to make it all happen.

The ESOP Association announced the winners of the 2012 Annual Awards for Communications Excellence (AACE):

Last week I discussed the requirement to provide Summary Plan Descriptions (SPDs) to participants in your ESOP, but when do your employees become participants in the ESOP?