ESOP Statistics, ESOP Coverage in the WSJ, Steady Decline Percentage of Assets Invested in Company Stock
The February 14, 2008 Employee Ownership Update is online and discusses the following:
- ESOPs Grow Significantly in 2007
- Wall Street Journal Features ESOPs
- New Data on Employee Ownership in 401(k) Plans
- Entries Open for Annual Principal 10 Best Small and Medium Sized Companies for Financial Security Awards
2007 ESOP Statistics Available
As discussed in 2007 ESOP Statistics, Estimating Techniques, 1993 Peak, and Aggressive Acquirers, the NCEO has updated their ESOP Statistical Profile. The Update explains that the increase in value of plan assets is due to a combination of market gains, additional performance gains attributable to being an ESOP company, and acquisitions made by ESOP companies. The acquisitions also explain why the value of plan assets and number of participants are increasing at a significantly faster rate than the number of plans (even considering the 3% ESOP termination rate).
As discussed in yesterday’s post, the Update explains in more detail how they derived the numbers:
The numbers are necessarily estimates. First, we looked at all the Department of Labor Form 5500 filings for the most recent years available (2006 for some plans and 2005 for others). These data provided a baseline number for plan assets, plan participants, and number of plans. The data are subject to reporting errors, so we cannot call our projections anything other than reasonable estimates. Then we used IRS data on the number of letters of determination for new plans and plan terminations. These numbers, unfortunately, appear subject to serious reporting errors and inconsistencies, but the relationship between terminations and new plans seem fairly consistent. Using that data, and input from plan providers on trends on new plan formation, we made a conservative estimate of how many net plans were added in 2006 and 2007 that would not have been picked up in the Department of Labor data.
We defined ESOPs to include plans that filed as ESOPs, stock bonus plans, and profit sharing plans primarily invested in company stock. There were 530 profit sharing plans so invested with about $50 billion in assets and 630,000 participants. While these profit sharing and stock bonus plans are not technically ESOPs, functionally there are few differences, especially for participants.
ESOP Coverage in the Wall Street Journal
We have profiled most of the ESOP Coverage in the Wall Street Journal. The Update discusses how this is the result of a suggestion to the Journal reporters from the NCEO. The NCEO is encouraging its members to send a link to their contacts and provided some suggested language for an email:
"I wanted to call your attention to what I think is a great set of stories you might not have seen.
The Wall Street Journal on February 7 ran a full-page of articles on employee stock ownership plans. There is a link to all this material and more at online.wsj.com/small-business/small-business-link.
I think this is one of the best explorations of employee ownership in a major publication ever produced, and anyone with any interest in the topic should take a look.
The article was the product of a suggestion to the paper from Corey Rosen of the National Center for Employee Ownership. The center is a great resource on employee ownership. They have books, webinars, and an upcoming annual meeting that covers all aspects of the topic. Their site is well worth visiting as well. Their site is www.nceo.org."
Steady Decline of Percentage of Assets Invested in Company Stock
Last week we discussed the percentage of assets invested in Company Stock in Too Concentrated in Employer Stock? The same report discussed in the post (the 2006 EBRI/ICI Participant-Directed Retirement Plan Data Collection Project) notes that 11% of plan assets were invested in company stock in 2006, compared to 19% in 1999.