AIEmployee Stock Ownership Plans: barriers, benefits, and proposed legislation

Labor Department and Labor LawSenate Health, Education, Labor, and Pensions · 2025-07-24 · 119th Congress
The Senate HELP Committee held this hearing to examine how Employee Stock Ownership Plans (ESOPs) benefit workers and companies, and to discuss bipartisan legislation aimed at removing federal barriers to their formation, including unresolved Department of Labor valuation regulations that Chair Cassidy said have been outstanding for 51 years [0:18:52]. Begins at 0:16:08
Transcript
Highlights

Title

Employee Stock Ownership Plans: barriers, benefits, and proposed legislation

Purpose

The Senate HELP Committee held this hearing to examine how Employee Stock Ownership Plans (ESOPs) benefit workers and companies, and to discuss bipartisan legislation aimed at removing federal barriers to their formation, including unresolved Department of Labor valuation regulations that Chair Cassidy said have been outstanding for 51 years0:18:44. Witnesses from employee-owned companies and an academic researcher testified about retirement security, financing challenges, and pending bills. Begins at0:16:08

Who spoke

Chair Bill Cassidy (R-LA)0:16:08: Opened by noting 86% of Americans want Congress to focus more on retirement0:16:08 and that ERISA has never issued required ESOP valuation regulations in 51 years0:18:44; later questioned witnesses on financing shortcomings of traditional bank loans versus a federal loan program1:22:15.

Sen. Bernie Sanders (I-VT), Ranking Member0:20:31: Praised Vermont's employee-owned companies0:20:31, argued employee ownership counters outsourcing and CEO-focused corporate models0:21:31, and announced new legislation to provide financial assistance for worker buyouts via ESOPs or cooperatives0:24:19; closed by quoting Ronald Reagan's 1987 endorsement of employee ownership0:25:00.

Mr. Bill Roark, Torch Technologies co-founder0:28:06: Described Torch's growth to 100% ESOP by 2011 and over $800 million in annual revenue0:29:27; said unclear valuation rules create fear of forced sale if a low valuation invites external buyout offers1:10:22; explained Torch's public benefit corporation structure, approved by 90% of employees1:44:58.

Mr. Eddy Dupuis, Acadian Companies CEO0:33:51: Described Acadian's growth from 2 ambulances to over 750 and 5,000 employees since transitioning to an ESOP in 19930:34:47; said roughly 8-10 companies he spoke with shied away from ESOP conversion1:11:18; warned Medicaid cuts will strain the company financially while call volume stays constant1:38:33.

Mr. Brock Barton, King Arthur Baking Company CFO0:39:10: Explained King Arthur became employee-owned in 19960:40:08 and described how the company avoided layoffs during a 2022 commodity-price downturn by engaging employees directly0:42:28; noted the company lowered its diversification eligibility age to 401:01:56.

Dr. Joseph Blasi, Rutgers Institute for the Study of Employee Ownership0:44:15: Cited data showing about 15 million ESOP participants and $1.8 trillion in total assets0:44:43, and said ESOP participants have roughly double the retirement wealth of non-ESOP workers age 50+0:46:04; identified lack of financing and awareness as key barriers to wider adoption0:48:44.

Sen. Tommy Tuberville (R-AL)0:25:33: Introduced witness Bill Roark0:25:33 and asked how ESOPs provide job security during ownership transitions0:49:47 and what federal changes could help0:53:10.

Sen. Jon Husted (R-OH)0:58:39: Asked witnesses to compare private-equity exits with ESOP exits and how workers can diversify retirement holdings0:59:08.

Sen. Maggie Hassan (D-NH)1:04:07: Highlighted her bipartisan bill with Sen. Daines to equalize S-corp and C-corp tax treatment for ESOP stock sales1:04:24; asked how ESOPs help workers at all levels share in company success1:06:54.

Sen. Roger Marshall (R-KS)1:08:20: Praised ESOP culture and pressed Roark on the importance of resolving valuation uncertainty1:09:47; also discussed Kansas wheat quality with Barton1:11:44.

Sen. Tim Kaine (D-VA)1:13:51: Described Virginia ESOP examples including Wiley Wilson and an unnamed building-supply company that repaid its ESOP loan in 12 of 20 years1:15:48; explained his valuation bill would create an IRS-based safe harbor for ESOP sellers1:18:12; later asked Roark to explain public benefit corporation status1:40:55.

Sen. John Hickenlooper (D-CO)1:25:00: Shared his own experience building employee alignment as a former small business owner1:25:32; asked about state-level ESOP incentives1:26:27 and industries especially receptive to ESOPs1:29:42; entered a statement from the Employee Owned S Corporations of America into the record1:30:41.

Sen. Jim Banks (R-IN)1:31:29: Noted his mother worked 30 years in a nursing home that became an ESOP1:32:09, cited roughly 6,400 employee-owned companies in Indiana1:32:34, and asked how the economy would differ with broader ESOP adoption1:33:03.

Sen. Ed Markey (D-MA)1:35:27: Noted over 50% of Massachusetts business owners are 55 or older and lack succession plans1:35:54; pressed Dupuis on how recent Medicaid cuts passed by Congress will affect Acadian's operations1:37:29.

Key moments

Cassidy said federal law has required DOL regulations clarifying ESOP stock sales for 51 years, and none have been issued despite bipartisan requests0:18:44.

Roark recounted being laid off and having his office packed after a company acquisition, motivating him to build an ESOP so employees could "retire with dignity"0:51:53.

Blasi cited research showing ESOP participants have roughly double the retirement wealth of similarly aged non-ESOP workers, and 0% reported layoffs in the last year versus 7% of non-ESOP workers0:46:040:47:03.

Roark said Torch cannot contribute more than the 25% maximum allowable limit to employees' ESOP accounts even when the company could afford to give more0:53:31.

Sen. Kaine detailed his bill with Sen. Marshall that would use existing IRS valuation principles to create a legal "safe harbor" for ESOP sellers, addressing 50-plus years of regulatory uncertainty1:18:121:11:44.

Blasi said the federal government generally does poor job of sharing ESOP information across cabinet departments and that SBA financing has "not been friendly" to ESOPs1:08:011:22:15.

Dupuis said the Medicaid and Affordable Care Act cuts recently enacted by Congress will reduce reimbursement while Acadian's ambulance operating costs stay the same, since crews must respond regardless of a patient's ability to pay1:38:331:38:59.

Roark described Torch's 2024 conversion to a public benefit corporation, approved by 90% of employees (both by share count and by headcount), enshrining employee financial growth, customer service, community giving, and helping other companies become employee-owned as co-equal goals with profit1:44:581:42:31.

Blasi estimated roughly 137,000 U.S. businesses with 33 million employees and $15 trillion in sales are potentially convertible to ESOPs, given that 52% of business owners are near retirement age0:48:18.

Dupuis said Acadian had no layoffs despite fiscal year 2022 financial underperformance, crediting the ESOP's long-term sustainability focus over quarterly targets0:57:451:20:47.

Metadata

Official titleBusiness meeting to consider the nominations of David Brian Castillo, of Washington, to be Chief Financial Officer, Department of Labor, Brian Christine, of Alabama, to be an Assistant Secretary of Health and Human Services, Brittany Panuccio, of Florida, to be a Member of the Equal Employment Opportunity Commission for a term expiring July 1, 2029, Jonathan Snare, of Virginia, to be a Member of the Occupational Safety and Health Review Commission for a term expiring April 27, 2029, David Barker, of Iowa, to be Assistant Secretary for Postsecondary Education, and Mary Riley, of the District of Columbia, to be Assistant Secretary for Legislation and Congressional Affairs, both of the Department of Education.
CommitteeSenate Health, Education, Labor, and Pensions
Chamber / CongressSenate · 119th Congress
Date2025-07-24
TypeMeeting
Witnesses
(none listed in event metadata)
Videosenate-isvp
Transcript249 caption blocks · 11,441 words · 1:46:17 runtime
EventCongress.gov 337285