During a Senate Health, Education, Labor and Pensions Committee hearing prior to the Congressional recess, Sen. Tommy Tuberville (R-AL) questioned witnesses about the ESOPs and small business investments.
00:00I will thank you all. I'll defer to Senator Tuberville to ask questions.
00:05Thank you, Mr. Chairman. Gentlemen, thanks for being here. Important topic. Mr. Rohr, it's got to be pretty mind-calming to know if you work in an ESOP and you have some of the owners exit the company, that everybody's not going to lose their job.
00:26So what kind of security does an ESOP structure have for all employees that you've seen? Some examples.
00:35Well, you know, we work real hard to build a succession plan in that prepares our employees as people retire to step forward.
00:46You know, that is a challenge. One of the biggest challenges we've had is the success of the ESOP has led to people retiring early, so we have to work that problem a little harder.
00:56And be training people ready to step into the role.
01:01The departure of employees that are retiring actually creates lots of opportunities for the other employees to accelerate in their career quicker.
01:12So a successful ESOP actually creates a lot of successful careers.
01:17It also creates the ability for employees to retire with dignity.
01:25In fact, the announcement of this hearing went out on our social media last night.
01:31In one of the posts this morning, I'll quote for you.
01:33It says, Jim Deal, one of our retiring employees seven or eight years ago, he says,
01:38Tell them how much you helped us retire with dignity.
01:43That is, to me, the essence of why I wanted to do this.
01:48You know, some 25 years ago, a company bought the company I worked for.
01:53And a few months after it was bought, I'd had a successful career.
01:57I went from being an entry-level person to an executive.
02:03I was president of an operating segment.
02:06In that time, I'd had one of the most successful careers of anyone at that company.
02:11As that acquisition evolved and I was there, I was shortly thereafter walked to the door and asked, told,
02:22as I was handed my severance check that we'll pack your office and send your stuff home.
02:28When I started this company, at the core of what I wanted is I wanted people to retire with dignity.
02:35When I walked out and stood on that corner, I didn't feel very dignified.
02:41When I meet an employee in the grocery store, I want them to come hug me, not run from me.
02:48With the ESOP, I get lots of hugs.
02:52Every year when the ESOP statements come out, I get lots of hugs.
02:57This is a different way of doing business.
02:59I never want to see an employee walk to the door in such an undignified manner.
03:06I put my whole life into that company.
03:08Several times, I worked 24 hours straight to get a delivery out on time.
03:14Was that respected?
03:16No.
03:16My stuff showed up in boxes with a bunch of crap that I didn't really want.
03:23It was not dignified at all.
03:26I hope that answers your question, Coach.
03:28So how can we help on the federal level to make ESOP structure more viable for them?
03:34Well, I think there's lots of ideas being proposed here in several of these bills.
03:38You know, making this easier, making it clearer in what we're supposed to do.
03:45There's a lot of murkiness in the bills.
03:48You know, one of the things for us in the last few years, we've been in a position where we
03:56could contribute more than the maximum allowable to our employees, and that creates an issue
04:02with the ESOP itself.
04:08If the limit's at 25%, I can only give 25%.
04:12If it were higher, we, in some cases, would have given higher, including this year.
04:17So there are some pieces there where we could just fine-tune some things.
04:23The ESOP is a wonderful tool, and it provides stability for the employees and provides a retirement
04:30path for them as well.
04:31So I think the more that we can refine the regulations around it to encourage people to be able to
04:38do this, clear up the rules on how the valuations are done so that it's clear what needs to be
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