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when the ESOP was formed, and he and other staff at the time
were given credit toward the full vesting period for their years
of service. In fact, some people were already fully vested when
the program was first instituted. For new employees the ESOP
has allowed them to start saving towards a retirement plan.
“I feel lucky to work for a company that has an ESOP
program that provides a retirement package, in an industry
where that isn’t necessarily the norm,” Hess said. “In all
honesty, it has probably been what has kept me here even
as other opportunities have come up over the years. I’m
watching my retirement grow fairly consistently right here,
so why would I go work somewhere else?”
Hess say that more than anything, the ESOP structure
has created an ownership culture in that employees see
top-to-bottom on every decision—such as how guests are
treated in customer service, whether a purchasing request
is really necessary, and whose responsibility it is to turn the
lights out at the end of the day. “Everyone is always asking,
‘How is this going to make the company better?’” Hess said.
“It’s just a different feeling of shared responsibility when
everyone can say, ‘I own this company. This is my business.’”

uccession planning is a big concern for any business owner,
S particularly in a day and age when so many Baby Boomers
are stepping down from their ownership/management roles. In
the ski industry, there are still a lot of mom-and-pop operations What is an ESOP?
and small partnerships between friends and families—which is Courtesy Menke & Associates
why ESOPs may be a viable option for many of them as those An Employee Stock Ownership Plan (ESOP) is a tax-ex-
business relationships come to their natural end. empt trust that enables employees to acquire beneficial
Among the specialists that put together ESOPs are Black ownership in their company without having to invest their
Diamond Partners, a wealth advisory group at Janney, and own money. An ESOP enables the sponsor company to
Menke & Associates, one of the oldest and largest ESOP make tax-deductible cash contributions to the ESOP trust
providers and administrators in the country. John Menke, (a retirement plan contribution) so that it can acquire
the firm’s founder, co-drafted the original ESOP legislation company stock on behalf of its employees while creating
behind employee ownership programs in the United States liquidity for current shareholders without going public
(within the Employee Retirement Income Security Act of or being sold. Employees then participate in company
earnings and growth in the stock price.
1974), and has since helped establish more than 3,000 ESOPs
Because employees are not taxed currently on the
for companies of all sizes. (Menke itself is 61 percent employee
stock that is acquired for their benefit, they are able to
owned.) These two companies have teamed up to provide suc-
acquire up to twice the amount of stock they could acquire
cession planning consulting specifically to the ski industry,
if a trust arrangement were not used. That is, if shares of
advocating the ESOP structure as a logical choice for many ski stock were issued to an employee by the company, that
areas considering their succession plans. employee would be taxed currently on the value of those
“We’ve all seen resorts sold where there’s an acknowl- shares.
edgement of ‘we had to do it’ or ‘some people in the Also, if an employee buys stock directly from the
partnership needed the money out now,’ but there’s also company or other shareholders, that employee is using
palpable disappointment around the sale, where one or “after-tax” funds rather than pre-tax dollars. The use of
more of the partners or heirs really would have loved to a trust eliminates this tax problem since the trust is not
stay involved,” said Bill Stewart, executive vice president taxable and frees employees from income tax liability until
of wealth management at Black Diamond. “There’s a lot of the shares are distributed.
opportunity there for creating an ESOP, which is a well-

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