Engineering Inc. - March/April 2005 - 20

 We're seeing a You have to sell resurgence in them the value of the
[ESOPs]. There's a program so that growing trend. they appreciate what
COLVIN MATHESON the benefit is to MATHESON FINANCIAL ADVISORS them. Most
numerous possibilities and con- c o m p a n i e s in the U.S. with cluded
that a so-called leveraged e m p l oy e e - ow n e d stock plans.
successful ESOP ESOP made the most sense. In Most are privately held.
About companies have 1994, a leveraged ESOP was put 8 percent are
professional firms, in place and the company bor- s a y s the association,
which tremendous rowed enough to purchase 30 w o u l d include engineering
employee percent of Pennoni's shares. By companies. 2003, the firm had
doubled in Besides empowering employ- communication s i z e and, with the
help of e e s , one of the main reasons plans. another bank loan, was able
to c o m p a n i e s form ESOPs is to purchase another 30 percent of take
advantage of generous tax ERIC FLICKER PENNONI ASSOCIATES the founder's
shares. breaks created by Congress to Eric Flicker, Pennoni Associ- firm
who is considering selling spur employee ownership. Large ates' chief
financial officer and a the business. shareholders and owners of pri- f o
r m e r ACEC chairman, says In a typical non-ESOP sale v a t e companies
often turn to e x p l a i n i n g the program to within a company, bonuses
are E S O P s when planning for employees is a key to achieving paid to key
managers, who, in retirement and succession. An success in an ESOP. Flicker
says t u r n , use that money to pur- E S O P allows them to free up t h a
t since employees do not chase stock from the company's t h e i r illiquid
company stock founder or major shareholder. without triggering capital
gains Steiker calls these transactions t a xe s , and preserves the com-
tax disasters because the bonus pany's independence by keeping r e c e i v
e d by the managers is i t in the hands of valued col- taxed at a 40
percent effective leagues and employees. An ESOP is a tax-qualified
federal and state combined mar- retirement plan that invests pri-
Engineering ESOPs ginal tax rate. And when they marily in the stock of a
com- buy the founder's shares, he or Engineering firms have unique pany.
The underlying theory is she gets hit with a 15 percent characteristics
that make them that by providing employees f e d e r a l capital gains
tax, plus e s p e c i a l l y well-suited for from mail sorters to top
man- l o c a l taxes. The result, says employee ownership, says James
agers with stock it will lead to Steiker, is the government has G .
Steiker, president and a greater personal stake in the e s s e n t i a l l
y been made a more founder of Philadelphia-based c o m p a n y's success
and, there- than 50 percent partner in the SES Advisors, Inc., which pro-
fore, increased productivity. I cash flow of the firm. v i d e s
consulting services for call it capitalistic socialism, says One firm that
has benefited ESOPs. Engineering firms, he Matheson. from the
implementation of an s a y s , are not typical takeover And there's
evidence that ESOP is Pennoni Associates, a targets. More than most busi-
these plans work. The Washing- m u l t i - d i s c i p l i n e d
consulting n e s s e s , the natural buyers are ton, D.C.

Engineering Inc. - March/April 2005

Table of Contents for the Digital Edition of Engineering Inc. - March/April 2005

Table of Contents
From ACEC To You
Ask Members
News & Notes
Market Watch
Legislative Action
COVER STORY: A Perfect Legal Storm
Interview With F. James Sensenbrenner, Jr.
Is There an Engineer in the House
The ABCs Of ESOPS
ACEC/PAC Donations Break All-Time Record
ACEC Roundtable
Members In the News
One on One
Engineering Inc. - March/April 2005 - Cover1
Engineering Inc. - March/April 2005 - Cover2
Engineering Inc. - March/April 2005 - Table of Contents
Engineering Inc. - March/April 2005 - From ACEC To You
Engineering Inc. - March/April 2005 - Ask Members
Engineering Inc. - March/April 2005 - News & Notes
Engineering Inc. - March/April 2005 - Market Watch
Engineering Inc. - March/April 2005 - 6
Engineering Inc. - March/April 2005 - 7
Engineering Inc. - March/April 2005 - Legislative Action
Engineering Inc. - March/April 2005 - 9
Engineering Inc. - March/April 2005 - COVER STORY: A Perfect Legal Storm
Engineering Inc. - March/April 2005 - 11
Engineering Inc. - March/April 2005 - Interview With F. James Sensenbrenner, Jr.
Engineering Inc. - March/April 2005 - 13
Engineering Inc. - March/April 2005 - Is There an Engineer in the House
Engineering Inc. - March/April 2005 - 15
Engineering Inc. - March/April 2005 - 16
Engineering Inc. - March/April 2005 - 17
Engineering Inc. - March/April 2005 - The ABCs Of ESOPS
Engineering Inc. - March/April 2005 - 19
Engineering Inc. - March/April 2005 - 20
Engineering Inc. - March/April 2005 - 21
Engineering Inc. - March/April 2005 - ACEC/PAC Donations Break All-Time Record
Engineering Inc. - March/April 2005 - 23
Engineering Inc. - March/April 2005 - 24
Engineering Inc. - March/April 2005 - 25
Engineering Inc. - March/April 2005 - 26
Engineering Inc. - March/April 2005 - ACEC Roundtable
Engineering Inc. - March/April 2005 - 28
Engineering Inc. - March/April 2005 - 29
Engineering Inc. - March/April 2005 - 30
Engineering Inc. - March/April 2005 - 31
Engineering Inc. - March/April 2005 - Members In the News
Engineering Inc. - March/April 2005 - 33
Engineering Inc. - March/April 2005 - 34
Engineering Inc. - March/April 2005 - 35
Engineering Inc. - March/April 2005 - One on One
Engineering Inc. - March/April 2005 - Cover3
Engineering Inc. - March/April 2005 - Cover4
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