ESOPtober Wrap Up: How Our Employee Stock Ownership Plan Actually Works
As ESOPtober comes to a close, we wanted to leave you with a clear, plain English look at how our Employee Stock Ownership Plan actually works behind the scenes. ESOPs can sound complicated from the outside, so here is what each piece really means.
In short, our ESOP gives every eligible employee a real, growing stake in the company they help build every day.
How Ownership Grows Over Time
Earning your shares takes time, and that is by design.
To start earning ownership, an employee needs to work 1,000 hours in a calendar year. From there, employees become fully vested, meaning the shares are entirely theirs, after six years, or at age 65, or in the event of death. This gradual timeline is what rewards employees for sticking around and growing with the company.
Employee owners hold shares, not voting power.
Employee owners are what is called Beneficial Shareholders. In plain terms, that means employees own real financial value in the company’s shares, but the shares do not come with voting rights over company decisions. Ownership here is about shared financial success, not day to day governance.
The share pool grows as the company grows.
There are currently 750,000 shares outstanding. Each year, new shares may be added to the plan, and how many depends on the company’s valuation and profitability from the previous year. Simply put, the better the company performs, the more value flows back into the plan.
Who Oversees the Plan
An ESOP involves a few outside experts whose job is to make sure everything is handled fairly and correctly. Here is who is involved and what they do:
BKD serves as our Third Party Administrator, or TPA. They help manage the day to day administration of the plan.
Husch Blackwell provides our legal representation, making sure the plan stays compliant and properly structured.
Lance Studdard serves as our Trustee, the person responsible for protecting the interests of employee owners and approving the plan’s valuation each year.
Our board members, Linda Pring, Ron Mueller, Andrew Friedman, and Larry Potashnick, help guide the company at a leadership level and support the long term direction of the plan.
How the Value of Your Shares Gets Calculated
Once a year, a formal process determines what each share in the plan is actually worth. Here is that process broken down step by step:
Step 1: The annual audit.
Our company completes its annual financial audit in January and early February, a process that typically takes 30 to 60 days.
Step 2: The valuation.
An independent valuation firm reviews the results of that audit to determine what the company, and the plan, is worth. This step takes about 45 days.
Step 3: Review and approval.
Our Trustee, Lance Studdard, along with BKD, reviews and approves the valuation report. This step takes roughly 30 to 45 days and results in individual employee statements, which are typically available on or about June each year.
What About Taxes?
The ESOP itself is exempt from federal and Missouri state taxes. That said, employees are still individually responsible for any tax liability tied to their own distributions when the time comes.
Beyond solving for ownership continuity, our ESOP has genuinely changed how our people approach their work. It does not just benefit our employees. It empowers them.
