ESOP 101: What is an Employee-Owned Company?
ESOP 101: What is an Employee-Owned Company?
Employee-Owned. Employee Stock Ownership Plan. ESOP. You’ve probably seen these terms splashed across TMC Transportation’s website and advertisements, but what do they mean?
As an employee-owned company, now ALL of TMC’s eligible employees are part-owners and share in company profits at no cost to them through an Employee Stock Ownership Plan (ESOP.) These profits come in the form of a long term retirement savings plan. This plan is similar to a 401(k), which TMC also offers their employees, except unlike a 401(k) employees do not have to contribute any of their own money.
Who at TMC is eligible for this Employee Stock Ownership Plan (ESOP)?
All TMC employees are eligible and automatically enrolled once they’ve met the following requirements:
1.) They must have at least one year of employment with TMC and worked at least 1,000 hours in that first year of service.
2.) They must be at least 21 years of age.
What determines the employee’s share of the profits?
The amount of shares allocated is based on their income and years of service with TMC.
How does this affect TMC’s employees?
The truth is, not a whole lot about the culture of TMC or the employees’ day-to-day has changed since they switched to being an Employee-Owned company. Office employees are not suddenly getting bills for the supplies they need, nor are the drivers getting billed for their equipment, truck repairs, or fuel. Simply put, TMC employees are now able to share the company’s profits in the way of shares. ESOP adds financial motivation and ownership responsibility while also providing a more rewarding retirement plan for the employees.
Research studies consistently show that employee‐owned companies perform better than companies that are not employee‐owned. The success of a company’s ESOP depends on how well the company performs in the future. ESOPs do not guarantee any minimum value, however TMC has had a strong track record of solid performance and hope to continue to be successful. As employee-owners, now all get to share in both the upside and the downside.
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