Sebago Technics and the Benefits of ESOPs

Mark Adams, President and CEO of Sebago Technics was our speaker on June 9.  Founded in 1981 by former W-G Rotarian Walt Stinson, Sebago Technics, Inc. is a consulting firm of more than forty design professionals and technical staff providing services throughout New England. In 1998, the ESOP was started to transfer ownership to its employees.  Since 2007, the company has been 100% employee owned.

 

Mark spoke on ESOP's or Employee Stock Ownership Plans. There are about 11,000 ESOPs in the US employing 13 million people.  The most common industries with ESOPs are manufacturing, engineering, construction, and banking.   Among the other Maine ESOP companies are: Cianbro, Sargent Co, Johnny's Select Seeds, Moody's Collision, Lanco Enterprises, Howell Laboratories, J & S Oil, Prock Marine, and Maine Drilling and Blasting, among others. 
 

How it works: A company creates an ESOP Trust in which eligible participants are allocated shares. Each year an Independent Valuation Company determines share value. The Trust Administrator tracks all employee accounts.  The company makes an annual contribution to the trust. Upon leaving the company due to resignation or retirement, eligible employees receive distributions over 5 year period at which time the employee pays taxes.

Benefits: As employees have a stake in a company, it tends to be more productive and more profitable.  It can increase financial capacity, protecting jobs and the integrity of the company.  It can offer better employee benefits, including providing employees with retirement benefits.  It can also provide tax benefits for both the company and employees. The broaden ownership incentivizes employees to “think like owners”.