rolling out your esop: what to say, when, and how...rolling out your esop: what to say, when, and...

For details on The ESOP Communications Sourcebook or to order online, visit www.nceo.org/r/sourcebook

Rolling Out Your ESOP: What to Say, When, and How

Alex MossPraxis Consulting Group

Excerpted from The ESOP Communications Sourcebook, 6th ed.

Copyright © 2014 by the National Center for Employee Ownership (NCEO). Do not reproduce or redistribute this material without the express written permission of the NCEO. See www.nceo.org for more information.

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Chapter 3

Rolling Out Your ESOP: What to Say, When, and HowAlex Moss

This chapter addresses the process of introducing an ESOP to your company, from the initial announcement through a series of specific follow-up activities over the first year or so. Taken together, these ac-tivities will be called the “ESOP rollout process.” The first step in this process is typically a kickoff meeting. This chapter provides a detailed review of this type of meeting. The other steps in the rollout process are summarized.

The kickoff meeting alone is not enough to build a full understand-ing of the ESOP and ownership, but it is a critical first step in setting expectations for effective employee ownership. The specific structure and content of activities that follow the rollout vary from company to company.

The goals of the ESOP rollout process are to help employees under-stand your ownership transition and to build their commitment to trying to make your ESOP and your company successful. Employee reactions to the ESOP are often mixed. ESOPs seem strange to many employees, and there is a natural tendency to distrust the goals, the process, and even the specific details of ESOP communications. This phenomenon is reinforced by the technical complexity of ESOP rules. At the same time, many employees may feel excited about the potential benefits of being owners. They have many different expectations about what ownership “ought” to mean, some of which may be consistent with your selling shareholders’ and your company’s goals, and some of which aren’t. The underlying purpose of all ESOP implementation activities is to provide

26 | The eSOP COmmuniCaTiOnS SOurCebOOk

information that improves trust in the concept of shared ownership, and that over time aligns everyone’s expectations about ownership, all with the goal of improving your company’s long-term success.

The challenge is that, at the beginning, no one other than those who were actively involved in putting the ESOP together understands what an ESOP is, how it works, how it will affect the company, or how it could benefit individual employees in the future. By the end of a suc-cessful rollout, every employee:

• will have participated in a range of educational activities;

• will have received various legal and informal supporting documents;

• will understand at a basic level what the ESOP is, what ownership through an ESOP means in your company, what to expect from the company, and what is expected of him or her as an actively participating employee-owner; and

• will know where to get answers to further questions about the ESOP and ownership in general.

Note that improving company performance is not an achievable goal of the ESOP rollout process, because even a very successful initial rollout by itself is not sufficient to achieve the serious performance benefits we term “building a high-performance ownership culture.” The rollout process lays important groundwork, but it is by no means suf-ficient to achieve the longer-term cultural changes and organizational performance benefits that broadly shared stock ownership can yield.1

In an ideal world, an ESOP rollout would involve a series of co-ordinated activities over the first 12 to 18 months. In practice, many companies conduct a few activities, with or without a clear plan in mind, and then figure out what should come next based on how well the first messages sink in and what questions they hear from employees. Depending on your company’s history and current needs, you can use the process outlined in this chapter either to develop your own ideal

1. The process for developing a high-performance ownership culture is described in detail in Virginia J. Vanderslice and Alexander P. Moss, “Getting Your Company Ready for an ESOP: the Ownership Culture Perspective,” available online at www.praxiscg.com/thought-leadership.

Rolling Out Your ESOP: What to Say, When, and How | 27

rollout plan, or as a checklist against which to measure the steps that you have already taken, evaluate gaps, and consider future activities.

The common steps in a full ESOP rollout include:

Step 1: Initial companywide kickoff meeting;

Step 2: Leadership planning to clarify ownership goals and strategies;

Step 3: ESOP committee setup, training, development, and planning;

Step 4: Detailed ownership and/or business training; and

Step 5: Monitoring, evaluating, and refocusing.

In principle, beginning with step 2, even before the ESOP deal is completed and the initial kickoff meeting is announced, is ideal. But, in practice, time often doesn’t permit this type of advance planning. So, while the order of the steps above is more common and realistic, it is not quite ideal.

Each step includes some combination of meetings, discussions, and documents, in both print and electronic formats. Examples of these documents are included elsewhere in this book, as well as on the NCEO Web site at www.nceo.org, and from your professional advisors.

Step 1, Announcing the ESOP: The Initial Kickoff MeetingPurpose

The first step is to announce the formation of the ESOP and its pur-chase of company stock on behalf of employees. The general purposes of the initial kickoff meeting are to set the context—why an ownership transition in the first place? why an ESOP?—to explain the ESOP at an overview level, and to reinforce a general sense of where the company is headed and how the ESOP is a critical part of the plan to get there.

Some companies make the mistake of expecting employees to understand and applaud this announcement. In fact, employees are often somewhat stunned to hear the news and may be fearful at first about “what it really means.” It is important not to expect an immediate acceptance of the ESOP or to be too disappointed when the expected


standing ovation fails to materialize. The kickoff should be viewed as the beginning of the communications process, not the whole process, and it will take some time for this announcement to sink in and have meaning. The point of the kickoff meeting is to make the announcement and to set up future communications activities.

Timing

The kickoff meeting is most commonly held after the ESOP has been established and has purchased stock. Occasionally, this meeting is conducted prior to the actual completion of the ESOP transaction. Companies that do this may simply want to solicit employee approval or input. In rare cases, employees are given the opportunity to redirect other retirement funds into the ESOP, and these meetings become part of the required legal disclosure required in the investment process. These, however, are exceptions.

The initial ESOP announcement is ideally made to all employees at the same time, often in one large meeting. In larger, multisite companies, this may be done via consecutive onsite meetings or by Web-cast, if your company has a high-tech bent. Whatever the logistics, the point is to get the same message out to everyone at as close to the same time as possible.

Attendees

Typically, all employees attend this meeting, not just those who have already met the requirements to become ESOP participants.2 The benefit of this is that all employees have the opportunity to learn about what the ESOP is, how it works, and what the eligibility requirements are. Some companies prefer to limit attendance to currently eligible participants,

2. The most common exception is in unionized companies in which labor and management choose not to bargain for ESOP participation by union members. These employees generally do not attend this or any other ESOP meetings, but certainly union members may be invited or at least permitted to attend. Sometimes the union leadership prefers this so that their members understand the issues; sometimes they prefer that their members do not attend, so that members stay focused on the package of benefits that has been negotiated.


on the theory that this is a privilege of being in the ESOP and that new participants will have their turn in the future. On balance, we generally recommend that all employees attend because this builds on the theme that the ESOP is meant to be for everyone, even those who will not become eligible until a future date. However, if some employee groups will permanently be excluded, it may be best to meet with these groups separately to explain why other employees are participating in the ESOP.

Many companies find it helpful to conduct the meeting in the evening or on a weekend. This makes the meeting a special event rather than a “gather around the water cooler and then get back to work” announcement, and it adds to the sense that the announcement is worthy of special treatment. This permits some spouses to attend. Because spouses are often willing and able to ask clarifying questions, they can also become an important source of independent support for the ESOP and speed the process of creating a positive buzz. However, inviting spouses increases the scale of the meeting and limits the times that the meeting may be held. Some companies also prefer to focus on delivering the message only to employees at first.

You may also consider inviting the press and public officials, al-though this is uncommon. If the press does attend, it may be helpful to issue a press release in advance, giving them the basic details from your perspective. Reporters at this meeting will hear what you say to em-ployees and how employees react. Some employees may be intimidated by their presence, and some company leaders prefer to offer a level of internal detail that is not appropriate to share publicly. As a result, we suggest you avoid press participation until you have had a chance to discuss the basics with employees first.

Public officials also sometimes attend, particularly if they have been involved in lending money to the ESOP or assisting in another way that you wish to recognize. The ESOP is frequently part of a larger strategy to keep your company anchored in its community, and the sell-ing shareholders may be prominent citizens. Public officials are usually eager to support business owners. These kickoff meetings tend to be “feel-good events”—the news is very positive—so including public of-ficials provides an opportunity to build positive relationships for future reference. As with the press, however, some companies simply prefer to keep the meeting open only to employees.


The point is to use the kickoff meeting to reinforce a sense of com-munity both inside the company and outside, and to convey the message that the ESOP is meant to maintain local ownership and control—or to reinforce whatever your specific ESOP goals may be.

Meeting Format

There are many possible formats for these meetings. Examples include: a simple meeting with one or more speeches by senior leaders; a dinner meeting that may also function as an annual company meeting (or an-nual employee appreciation dinner); or an informal weekend meeting that includes a business meeting agenda during a larger event.

For example, one company rented a hotel for its meeting and invited employees and spouses to attend. Everyone knew that the new president was a racing fan. They created a “track” from room to room by laying down black landscape cloth and taping stripes down the middle with masking tape. After a few introductory remarks in a large conference room, employees divided into groups and traveled down the “ownership road,” moving from room to room. In each room, a different manager or outside ESOP advisor explained an aspect of the ESOP for five to 10 minutes, and then the group moved on to the next station on the road. This entire exercise lasted a couple of hours, with pit stops along the way and a company dinner at the end.

Another company held a “piece of the pie” party at lunchtime. They frequently hold all-employee meetings in the cafeteria, and they adapted one of these meetings for the formal ESOP announcement. One side of the room was lined with tables containing many different kinds of pies. Everyone got a piece before sitting down to hear from company leader-ship and to meet several of the outside ESOP advisors, who explained their roles and what to expect over the coming months. One lucky advisor received his pie the old fashioned way—in the face—although this is not generally recommended.

Seasonal themes are common. The ESOP kickoff may be integrated into a holiday party in the late fall or early winter; a beach or Mardi Gras theme event in the late winter and spring; or a picnic, barbecue, or river cruise. Of course, October is “Employee Ownership Month” within the national ESOP community, and some companies choose to coordinate their kickoff meetings with these events. In most cases,


the timing of the ESOP transaction sets the basic time frame, and the meeting follows soon after with a theme and format that depends on the time of year and your company’s style.

It can be helpful to follow patterns that are already familiar to em-ployees when introducing the ESOP. If you hold regular all-employee meetings in a certain way, consider following a similar format for this meeting. The message is: “Yes, something new is happening, but we’re not giving up on what got us here in the first place. The ESOP is a new tool to support the kind of business that we’ve always aspired to be.”

Don’t delve too deeply into the technical details of the ESOP and the transaction in the kickoff meeting; rather, keep the focus on the big-ger picture. This meeting is just an introduction to the ESOP concept. More details will come later.

Later in this chapter is a sample agenda that can serve as a starting point for you.

Step 2, Where Are We Going, What Do We Need? Leadership PlanningOnce the ESOP has been installed, the transaction has been completed, and the initial announcement has been made, there is generally a collec-tive sigh of relief and a period we call “the ESOP hangover.” Companies often lose sight of their ongoing ESOP rollout strategies during this period. Sooner or later the questions will arise: “What are we getting from our ESOP and from employee ownership? How are they contrib-uting to the success of our firm?”

This leads into the question, “What do we want?” and “Which of our strategic goals should be achieved more successfully now that we have an ESOP?” Once again, this is a much larger discussion about creating a broader ownership vision that is linked to improving the business, and this topic is reviewed in detail elsewhere.3 These questions should begin to be answered as part of the ESOP rollout. Therefore, we summarize here a basic process for engaging senior leadership in identifying how

3. See, for example, Virginia J. Vanderslice, “Harnessing the Power of Ownership Passions: Creating a Shared Ownership Vision,” available at www.praxiscg.com/thought-leadership.


the ESOP should improve the business and in setting an agenda for future ESOP implementation activities to achieve these goals.

The basic process involves one or more senior leadership planning meetings with the following goals: to define your company’s ESOP and ownership goals in relation to your strategic plan, to identify specific desired “ownership behaviors” that support the ownership goals, to determine what the company needs to do to encourage and support these ownership behaviors, and to delegate authority to an appropriate individual or group within the firm (sometimes, an ESOP committee, often in conjunction with HR leadership) to design a detailed imple-mentation plan and timeline.

Because the rest of the ESOP rollout process significantly depends on the outcome of this process, what follows is an illustration but not necessarily a recommendation for any particular company.

Step 3, Who Carries the Ball? Setting Up Your ESOP CommitteeMany companies choose to set up ESOP (or employee owners’) com-mittees with responsibility for the rest of the ESOP rollout activities. (We are specifically referring here to informal communications and advisory committees, as opposed to ESOP fiduciary committees that provide direction to ESOP trustees.4 )

ESOP committees are a clear, visible symbol of employee involve-ment, an essential element in turning the ESOP opportunity into enhanced company performance. The committee is ideally set up during the initial ESOP rollout process, following the leadership plan-ning process described above, which among other things establishes the ESOP committee’s goals and tasks. Senior leadership can then say with confidence that future ESOP activities have not yet been fully fleshed out, but that a team of employees has been assigned to complete this task. The ESOP committee can then get to work on its targeted activities, and senior leadership can get back to focusing on running the business.

4. This distinction, and the general operation of these committees, is described in detail in other publications. See The ESOP Committee Guide, 3rd ed. (Oakland, CA: NCEO, 2011).


The ESOP committee’s job is to continue to define and implement the ESOP communications rollout. Start by training committee mem-bers so that they understand more about the ESOP and ownership, and about best practices among other ESOP committees. The committee may also need some basic training in the fundamentals of meeting skills and problem solving to enable them to function effectively as a team.

Next, the ESOP committee will brainstorm activities that it might undertake, set priorities, and then develop a schedule for high-priority activities during the first 12 to 18 months of the ESOP. These activities frequently include internal ownership events, such as ESOP meetings, orientations, and training; external events, such as conferences, and visits to and from other ESOP companies; and printed materials such as newsletters, FAQ lists, and other paper-based and intranet-based resources. Finally, your ESOP committee may be responsible for de-veloping ESOP and business training for employees—see step 4 below.

This all requires planning, budgeting resources (mostly time, some money), and monitoring and evaluating the activities and performance of the ESOP committee, all of which are discussed in other publications referenced earlier. The activities of the ESOP committee evolve over time and the description here may not fit if your committee is already more mature, but this is its common role in managing the initial rollout process.

Step 4, Laying the Foundation: ESOPs and Basic Business EducationIf your ESOP goals include enhanced employee motivation and im-provements to the bottom line, one of the most important steps in your rollout strategy will be providing detailed employee education about the ESOP and how it is linked to the performance of the busi-ness as a whole.

Assuming that you have conducted an ESOP kickoff meeting along the lines described in step 1, employees will be familiar with its basic terms. However, few will take the initiative to develop a more meaning-ful understanding on their own, and most will still be very confused about the goals, rules, and opportunities of employee ownership. Thus, a more detailed ESOP and basic business education initiative follows.


The ESOP portion of this training follows the same general outline as the ESOP kickoff meeting described above. This time around, you will provide much more substantial detail, more supporting documen-tation, and engage employees in actually learning and remembering more. Companies have used many models and formats, ranging from simple PowerPoint presentations, to highly involved participant role-play exercises, to online Web/intranet training seminars.

The content and process will depend on the goals that you set in your leadership planning process. If your ESOP is designed only as an add-on benefit plan, your education goals will focus on teaching em-ployees the basic ESOP rules. If your ESOP is designed also to engage employees in improving your business now that they own a piece of it, your education goals will include some basic business education. The content will depend on how well employees already understand core issues, such as business strategy, financial statements, and performance improvement goals. Many other training activities may follow on these and related topics, particularly as your business evolves and employees need to understand how changing markets, technology, etc., are affect-ing your company’s future strategy and direction.

Most effective training follows established principles of adult educa-tion: the material is concrete, it relates directly to attendees’ personal experience, it is interactive (rather than being in a lecture format), and it provides information that attendees can use immediately. This learn-ing is most successful when conducted in relatively small groups of 8 to 15 employees, and each group represents a cross-section of the work force. Training sessions should be long enough to cover real content, but not so long that employees lose focus. Two to three hours typically works best in our experience. This means that each training session can be repeated several times at each site each day, depending on the size of the work force at each location, shift schedules, and the number of physical locations in your company.

It is advisable to present each session to all employees within a few days to a few weeks and then to take a brief break before returning to present the next session. This permits all employees to learn the same material at about the same time, it is less stressful for employees than all-day or multi-day training sessions, it permits the training team to focus on one part of the curriculum at a time, and it spreads out the time that any individual or group of employees is “offline” in training.


By the end of this process, employee-owners will have participated in a series of structured educational activities that provide more detail not only about how the ESOP works but also about how this relates to your business success and what you want them to do to help your busi-ness achieve its goals. This is not a one-shot process; it is the beginning of an ongoing effort to establish a foundation of knowledge, some clear momentum, and expectations for the future.

Step 5, Lather, Rinse, Repeat: Ongoing Monitoring and ImplementationThe essential ingredients of any project plan are “scope, schedule, and budget,” and your ESOP rollout will live and die by these measurements. In an ideal world, a clear review process would evaluate the whole of the ESOP rollout plan against the original desired outcomes, budgeted resources, and delivery schedule, and then would help you plan future activities based on work that had not yet been completed and new is-sues that had arisen.

In practice, many firms conduct ESOP activities piece by piece, and evaluation is difficult because they have not clearly defined precisely what they want in the first place. Once again, this is not necessarily a bad thing. Many companies simply prefer to follow their hunches. Still, the planning framework gives a clear outline for the basic steps and the order in which they might be conducted.

This chapter presents a number of idealized frameworks, formats, and outlines with the goal of providing tools for you to use in design-ing and implementing your own ESOP rollout process. These activities may be conducted right after your ESOP is established (or even a bit earlier, in some cases), or they may be added to the mix over time as you become aware that one or another element seems to be missing.

It is important to reemphasize the underlying purposes: to build trust in the entire concept of ownership and to align everyone’s expecta-tions so that ownership contributes to the success of your company. The recommendations included here are designed to contribute directly to these outcomes. However, any implementation activities that accom-plish these underlying goals will ultimately contribute to a successful ESOP, even if you do not follow the literal form and content of our recommendations here.


Finally, at some point what was originally an ESOP rollout natu-rally evolves into the normal day-to-day management of the ESOP as an ongoing fact of life in your company. The systems, structures, skills, and habits formed during the rollout will provide residual benefits long after the initial activities have been completed. The rollout process itself sets the stage and frames employees’ expectations for what ownership means to the future success of your company and to your employee-owners personally.


Appendix: Sample AgendaThe following is an agenda template that we often start with, first in summary form and then with details for each agenda item. This is only a starting point, and not a recommendation that you should follow this precise outline.

Summary:

1. History, vision, and purpose

2. ESOP overview

3. Video or ESOP company speaker

4. Next steps

5. Conclusion

6. Open discussion/Q&A

7. Written support materials

8. Immediate follow-up

Details:

1. History, Vision, and Purpose

The meeting generally begins with the president, CEO, selling share-holder, or another recognized leader making an announcement and providing a brief framework. The announcement consists simply of telling attendees what is happening. This should be framed around a brief review of how the company was founded and how it has grown. The point is to set up the discussion to follow.

The rest of this first agenda item provides the framework for telling a story about “why.” Generally, this involves explaining that ownership of the company has to change at some point in time, that the owners have recognized this for some time, that they did (or did not) consider selling the company to an outside party, and that they want to ensure that this inevitable process happens in a healthy, planned way that supports the long-term success and independence of the business. Again, the specific message is unique to each company. The important point is to start with


a “from the heart” message by one or more of the selling shareholders about what you are doing and why, and how this is designed to protect and benefit the long-term future of your company and its employees.

Whoever speaks first should not delve into the specifics of the ESOP, because this first piece should be more emotional and philosophi-cal—on a grander scale than the technical discussions that can follow. However, the person should summarize the remainder of the agenda for this meeting, and introduce the other speakers.

It’s important not to “sell” the ESOP at this point. Explain it, make its benefits to other owners and the company clear, and communicate that stock can go up and down. Employees appreciate this candid approach.

This first agenda item may require 10 to 20 minutes—more than “Hi and welcome,” but less than “The Complete Rise and Fall of Our Company, Inc.”

2. ESOP Overview

Employees need to hear ESOP basics. This presentation can be made by a different person, so that there is a change of voice and focus in shifting to the details. A few alternatives:

• Some companies prefer to use a simple PowerPoint slide presenta-tion delivered by a senior leader.

• Some prefer to invite one or more of their ESOP advisors to explain. Outsiders can bring credibility and allay any concerns that the ESOP is some plan that the selling shareholders devised on their own. This works particularly well if these advisors are both inter-ested in talking with employees directly and are skilled at breaking down the complex language of ESOPs and ERISA into something approaching “normal English”—it really depends on the style and skills of the advisors.

• Some use speakers from the major trade associations. Outside experts bring credibility and can put this particular ESOP into context relative to other employee-owned companies locally and around the country.

The substance of this presentation often follows a simple pattern:


• Basic ESOP “facts and figures.” Illustrate the background landscape of employee ownership and explain where your ESOP fits into the bigger picture of employee ownership.

• Review of the ESOP deal. Tell who bought what from whom and for how much, where the stock is now (partially allocated, part in suspense account, depending on your specifics), and how shares will get into employees’ accounts over time as future contributions, loan payments, and allocations are made. This explains the ESOP as a whole, but at this point does not explain how it affects individual participants.

• Summary of the ESOP rules. Include initial eligibility, allocations, vesting, and distributions to show how the larger transaction results in shares going into and coming out of accounts of individual partici-pants. This addresses the question of what the shares will be worth.

• Valuation. Explain what factors drive stock value, both in the exter-nal market and internally at your company; the stock price history to date; and the outlook for the future.

• Ownership behaviors. Describe what individual participants can do to try to get the value up, or answer the question, “Now that you’re an owner, what do we want you to do?”

• Governance and decision-making in the ESOP. Explain what changes and what does not change, at the shareholder level, at the board level, and at the various operational management levels. Governance in ESOP companies is a big issue. Typically, not much will change from a purely legal perspective. For the purposes of this particular meeting, the point is that “ownership is about how we can work together to build a better company.”

It is important not to let this portion of the agenda become too focused on the details of ERISA and ESOP rules. You do not need and should not expect anyone to master the details at this point. Rather, the purpose is to give attendees a sense of what’s happening and why, to build trust in the goals and the process, and to create interest and readiness to learn through future educational initiatives.

The time frame for this part of the agenda should be at least half an hour and is rarely longer than one hour.


3. Video or Speaker from Another Local ESOP Company

Some companies include one of several trade association videos showing stories of other ESOP companies. Alternatively, if you know another local ESOP company whose leadership has a similar approach to yours, inviting them to speak for a few minutes can be beneficial. Both of these activities reinforce the notion that your company is not doing something odd or unconventional, but rather is following an emerging American tradition of sharing ownership broadly with employees, which in turn echoes some of our most cherished national values and ideals.

The most common videos (which are available at little or no cost) last about 15 minutes. Speakers from other companies can tell quick versions of their stories in this same time frame, but you will need to provide extra time for Q&A about the speaker’s company and ESOP if you choose this route.

4. Next Steps

What is said here depends on where you are in your ESOP implementa-tion process. If you happen to be following the exact outline presented in this chapter, this part of the kickoff meeting agenda would just summarize the remaining steps 2–5 and provide general time frames for completing each one. This item generally requires no more than 5 to 10 minutes.

5. Conclusion: Where Our Business Is Headed and How This Helps

It often works well if this portion is presented by a member of the senior leadership team, perhaps the selling shareholder if she/he will remain in control, or the new president if your ESOP involves a transition in management as well as ownership. This agenda item provides a brief review of the general outlook for the company going forward. The un-derlying message is “we believe it’s a good thing to be an owner of this business.” This may include a brief review of both recent successes and challenges on the horizon, and may conclude with a “call to action” that frames ownership as a challenge to employees to remain focused on building a business that they can be proud of owning.

This section doesn’t need to be long—five to ten minutes—but it is important to end on a strategic note, rather than ending after the somewhat technical discussion of the ESOP.


6. Open Discussion/Q&A

Although it is important to give employees an opportunity to ask questions, do not be surprised if there are not many. Most employees will have no questions yet—some will be a bit overwhelmed and not quite sure what to ask, others will just be ready to switch gears and do something else. To encourage employees to ask questions without fear of looking stupid, you could ask them to hand in written questions and then read and answer them in front of the room as a way to get started, have them discuss what they heard and what they do and don’t under-stand in small groups, and then select their group’s top two or three questions to read out in turn.

Even if all goes well, you will have a few skeptics, though they may or may not be willing to ask tough questions at this point. A few other employees will be supportive but will have detailed questions that you may or may not want to answer at this early stage. In addressing all ques-tions, consistently emphasize the purpose of pursuing the ESOP in the first place and assure employees that much more detailed information will follow in the coming weeks and months.

This final agenda item may require anywhere from five minutes to half an hour. Some companies prefer to allot a specific time, and others prefer to keep going as long as there are still questions. This often de-pends on whether food or other parts of the meeting agenda are waiting.

7. Hand Out Supporting Written Documentation

Many companies give employees a document to take home and review for future reference. Various written explanations of ESOPs are avail-able. The NCEO publishes an introductory booklet on ESOPs. Some companies prefer to prepare their own customized “20 questions about ESOPs” in advance so that they have a document ready to hand out at the end of the kickoff meeting.5 This is different from the summary plan description (SPD), the legally required summary of the ESOP plan document. The SPD may be ready to distribute at this point, but often

5. The process of summarizing the basic concepts in plain language is itself a learning experience for whoever takes it on. Some companies, therefore, de-lay distributing their own documents until their ESOP committees or other internal ESOP experts have time to develop them carefully.


it has not yet been produced and thus will be distributed later in the rollout process.

It is also important to translate this type of informal Q&A docu-ment into the most common languages used by your employees. Some companies use their own translators, while others use commercial translation services arranged through their ESOP advisors or on their own. However, the translators must have a basic familiarity with ERISA and ownership concepts. Have a bilingual person in your company who understands or has been trained on how the ESOP works to handle these issues. Make sure to edit any translated material before distribution to avoid potentially serious misunderstandings.

At this point, employees will have heard a simple overview, had the opportunity to ask questions, and received basic written information. The next step is to sort out what the longer-term messages should be and how to convey them effectively.

8. Immediate Follow-Up to the Kickoff Meeting

As a followup, some companies conduct Q&A meetings, brown bag lunches, or some other form of meeting within the week or two after the kickoff meeting. This gives employees time to think about what they heard, to read any materials that you handed out at the kickoff meeting, and to discuss their questions and concerns among themselves and at home before they formulate their own questions. This creates some visible short-term momentum, and addresses any early misconceptions that your employees may have.

Building on these meetings, you may then proceed to various forms of information sharing, such as phone or email hotlines and physical or intranet bulletin boards. Have some place where employees can post their questions. The ESOP committee commonly arranges these activi-ties (see step 3). Because the answers to many questions will depend on your company’s broader ESOP and ownership goals, do some planning on that topic.

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