Seven Facts About ESOPs and Employee Ownership

Seven Facts About ESOPs and Employee Ownership

As we celebrate Employee Ownership Month in October, we’re taking a closer look at the role of employee stock ownership plans (ESOPs) and how they shape the future of organizations like ACRT Services and our family of companies. Our 100% employee-owned structure guarantees our independence, allowing us to engage the best people to foster resiliency, environmental stewardship, compliance, stakeholder partnerships, and safer communities.

This commitment to independence is rooted in our history. In 1985, Richard (Dick) Abbott founded ACRT to introduce a new approach to line clearance, tree inventory, and personnel training. In 2000, Abbott passed the leadership to our current CEO, Michael B. Weidner. Under Weidner’s guidance, the ESOP was established in 2003, making our employees direct contributors to our success.

Since then, we’ve grown significantly — hiring and training top talent while expanding our customer base. Despite our growth, we’ve remained the only independent vegetation management company in the industry. We started diversifying and expanding our service offerings by acquiring Bermex, a leading metering services company in 2015.  In 2018, we reorganized under the leadership of ACRT Services, introducing brands that reflect our core services: vegetation management, arborist training, utility services, and environmental solutions. This expansion continued with the acquisition of StrategiTech which joined Bermex in 2020 to further enhance services, and EnviroScience, a nationally recognized environmental consulting firm, became part of the ACRT Services family in 2021.

To gain a clearer understanding of how ESOPs contribute to business growth and employee empowerment, we’ve gathered insights from the National Center for Employee Ownership (NCEO) to address some common questions:

1. What is employee ownership?

   Employee ownership refers to any arrangement where employees own shares in their company or hold the rights to their value, either directly or indirectly.

2. What is an ESOP?

   An ESOP (employee stock ownership plan) in the U.S. is a retirement benefit plan that buys and holds company stock for employees.

3. How many ESOPs are there in the U.S.?

   Over 6,300 companies in the U.S. have an ESOP.

4. How does an ESOP work?

   A company creates an ESOP trust, contributing tax-deductible cash or stock to it. The trust holds the cash and shares, allocates the available cash and shares based on eligibility requirements once a year, and employees vest over time, receiving their vested account value after leaving the company. ESOPs are the only way companies can redeem shares using pre-tax dollars.

5. What are the ESOP tax incentives for employees?

   Employees don’t pay taxes until they receive distributions from the ESOP. They can roll these into an IRA or another retirement plan to defer taxes further.

6. Are ESOPs the same as stock options?

   An ESOP is a tax-favored retirement plan that holds stock for employees, while stock options allow individuals to buy stock at a set price. The term “ESOP” may refer to stock options outside the U.S.

7. When do employees get paid out in an ESOP?

   Payouts typically occur the year after the plan year when employees leave the company, either as stock or cash, in a lump sum or installments, depending on the plan and the employee’s situation.

Learn more about ACRT Services’ 100% employee ownership and how it drives our mission.