Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Sean Forbes
June 1 — A bill that would encourage corporations in Missouri to sponsor employee stock ownership plans could help turn around the discouraging business environment in the state, lawmakers and business leaders said on a conference call.
Missouri has posted some of the weakest numbers in the nation for about the past 10 years for job creation (42nd), gross domestic product growth (43rd) and personal income growth (37th), Dan Mehan, president and chief executive officer of the Missouri Chamber of Commerce and Industry, said June 1, citing numbers from a Chamber report. “That’s not acceptable. And if you look at the fact that we are losing people in the demographic range of ages 22 to 44 more than we’re gaining or retaining, we think we’ve got to do everything we can to turn those trends around.”
The bill, H.B. 2030, would allow a 50 percent tax deduction of the net capital gain from the sale or exchange of a company to an ESOP if the company is at least 30 percent employee-owned. It passed with overwhelming bipartisan support in both chambers of the state legislature. State Sen. Ryan Silvey (R), who shepherded the bill through the Senate, said that indications are that Gov. Jay Nixon (D) will sign it. The bill was passed on May 25, and the governor has until July 14 to sign it.
The bill also has support from the Show-Me State's business community, but not specifically from any one company pushing for the legislation, Silvey said.
“We were hearing broad support within the business community at large that this would be a good tool to have the opportunity to convert their businesses in the future” to ESOPs, Silvey said. “But there were not specific people saying, hey, we need to have this so we can convert. That was not the case,” he said.
Hard data on how many companies may be interested in adopting the ESOP business model isn't available, because many aren't aware the model exists, Karen Buschmann, vice president of communications for the Missouri Chamber of Commerce, told Bloomberg BNA after the call. However, Missouri has thousands of business owners over the age of 55, so “as they plan to retire, selling to an ESOP would be a viable succession plan, enabling employees to have more financial security,” she said.
Federal ESOP legislation is also working its way through the House and Senate (82 PBD, 4/28/16).
If enacted, the Missouri bill would become law Aug. 28 and take effect Jan. 1, 2017, for businesses that choose to sponsor ESOPs.
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Text of the legislation is at http://src.bna.com/fuj.
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