EMPLOYEE OWNERSHIP FAQs
- Dale/Trustee appoints board members on behalf of Tates’ employees. Dale and the board can decide to remove a board member if their behavior requires such action.
- Dale will renew the board each year, and there are no term limits.
- The board can also vote to remove the trustee if necessary. (Trustee is hired by the board)
- Pass-Through Voting to Participants: This would become relevant if we wanted to sell or merge with another company of significant size. For example, our acquisition of McCall did not require a vote because they were <30% of our size. Some votes would require a simple majority vote, while others would require a 2/3 vote, all depending on relevant bylaws.
- Acquisition must be deemed “substantial” to require a vote, there is not a clear definition of substantial, but the general rule of thumb is anything over 30% of the size of our company should require a vote.
- Almost any form of sale of the company would require a company vote
- If the employees vote to sell there would be an immediate payout of about 60-70% of shares, with the remaining balance paid about 12-14 months following that.
- Our trustee would set up the voting process for us. He might conduct educational sessions to make sure all employee owners are informed.
- Each share of the company you have in your ESOP account equals one vote.
- According to the law, there is no required information to be disclosed, however, Tates emphasizes disclosing any information that we can without compromising the privacy of employees, and information that could be threatening our position within our industry, (top-line revenue, expenditures, etc.).
- Our basic schedule was set on a 10-year note, to date we have made significant prepayments on the loan and expect to pay off the loan faster than originally projected. This timeline is driven by the amount of excess cash the company can produce. The more profitable the company is, the faster we can pay off the ESOP loan.
- We are set to continue using Dale until the note is paid off. Once this happens, we will have the ability to continue using his services. Current leadership believes using a professional trustee like Dale is best to represent the interest of our employee owners.
- While more shares can increase your impact in a company vote, Tates still operates in a structured environment, leaving most operational decisions to the management team.
- Since we are not publicly traded, our shareholders cannot sell their shares whenever, those must be released on a schedule as determined by our plan.
- “Qualified” events – Death, disability, and retirement. Payout will begin within a year of the events and be paid on a five-year schedule.
- “Nonqualified” terminations (being fired, laid off, or quitting, etc.): The company can wait five years and from that date, Tates has another five years to pay you out.
- Note: after termination or retirement, non-redeemed stock will track with the current share price. Meaning if the company does well after you leave, the value of your share will increase (or vice versa)
- You must be 21, have worked for Tates for 1 year, and worked 1,000 hours (about 1 and a half months) to be in.
- You are vested for a year after working for 1,000 hours that year.
- You must be employed on the final day of the year to receive the allocation for that year.
- For Example: If you wanted to retire in August, and had met the 1,000-hour mark, you would be vested for that year, but would not receive an allocation for that year in the months following.
- If you are called for active duty, while you will not be paid by Tates, you will be vesting in the ESOP for your time.
- Regarding short-term service such as going to drill in the National Guard; The hours that you are gone for will be added up towards your 1,000 hours, helping you reach the qualifications for vesting and allocation.
- While you cannot get allocations until you reach 21 years old, you will begin vesting on your hire date.
- It is an extensive process to go back and forth between our appraiser and trustee requiring a lot of due diligence. The price is set by our profitability, which is the #1 goal for us.
- Because we are financially reviewed, we have an additional audit that takes another month or so compared to other ESOP’s.
- Each employee receives shares relative to the amount of payroll that they represent. It works the same way our bonus program does. Forfeited share programs are also allocated this way.
- We hold fiduciary liability insurance, as well as directors’ and officers’ insurance to protect us just like any other company.
- The company/trust is not individual shareholders. Employees own a piece of the trust that owns Tates, so there is no personal liability in an individual sense. However, misconduct or shortcomings can affect the value of your stock.
- We are 100% employee-owned, placing us at a strategic advantage within that space.
- Also, we offer a 401k plan not required of ESOPs.