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Hatco executives urge protection for ESOP plans

Hatco President David Rolston made sure he took advantage of his time with Congressman Mike Gallagher during the Republican's tour of the company's facility in Sturgeon Bay. One of the first issues to come up was protection for employee share ownership programs, also known as ESOPs. It is a relatively rare corporate structure where employees own all the stock in the company. The stock cannot be bought or sold by the employee. It is part of their compensation depending on tenure, and they have to sell it back to the company upon retirement. An ESOP only grows if the company's valuation increases. In other words, it is somewhat similar to an IRA with one company's stock instead of a broad portfolio. The question is when should the growth in an ESOP plan be taxed?

 


Rolston says over the 15 years the plan has been in place, growth has averaged 12 percent a year. Rolston believes the benefits from a secure retirement for Hatco employees overweighs the drawback as far as politicians are concerned, namely deferred taxation.

 

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