The ESOP Association recently released the results of the 2018 Economic Performance Survey—sponsored each year by the Employee Ownership Foundation—in its “2018 ESOP Economic Performance Report.” Survey results show that members of The ESOP Association have continued to experience positive corporate performance. The survey was sent to all corporate members of The ESOP Association in September 2018. Of this group, 186 companies responded. Key findings include:
- Fifty-five percent of respondents made ESOP contributions equivalent to 11 percent or more of covered payroll, and 17 percent of respondents made ESOP contributions exceeding 20 percent of covered payroll. This goes well beyond the standard 401(k) match of 3 percent.
- Respondents showed a greater increase in profits than revenue – 19 percent of respondents reported an increase in profits of 40 percent or more compared to only 2 percent of respondents reporting a rise in revenue greater than 40 percent. This trend is explained by ESOP companies doing well to manage costs and to work efficiently.
- Eighty percent of respondents reported an increase in their valuation for 2017. Of this group, 13 percent reported an increase greater than 40 percent, while 47 percent reported an increase greater than 20 percent. Only 12 percent of respondents reported a decrease in their valuation.
- Respondents were asked to evaluate their company’s decision to implement an ESOP – 94.9 percent reported that implementing an ESOP was a good decision. This is the highest since the survey was implemented in 2000. In addition, 86.4 percent of respondents reported that implementing an ESOP has affected company culture in a positive way, and 67.4 percent of respondents reported that having an ESOP has improved overall productivity of employees.
This survey indicates employee ownership can have a positive effect on corporate performance both financially and culturally. The full results of the study can be found here.
To learn more about ESOPs, contact Rachel or your trusted BKD advisor.