Concurrent Session 1

9 Innings of an ESOP

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

DETERMINE VALUE

Analyze the business to create a high-level assessment of your company’s value.

• Provide a short list of financial information

• Discuss owner interest and objectives

• Receive ESOP education

“I never blame myself when I'm not hitting. I just blame the bat, and if it keeps up, I change bats." - Yogi Berra

PREPARE FEASIBILITY STUDY

INNING

Get a detailed analysis that helps you decide whether an ESOP is right for you.

• A targeted value in an ESOP transaction

• Multiple structures (C v S, % sold)

• Gross and net proceeds to the seller(s)

• Benefit levels for ESOP participants

• Liquidity raised and cash flow scenarios

“Never allow the fear of striking out keep you from playing the game." – Babe Ruth

HIRE ESOP TRANSACTION TEAM

Select the professionals who will help you successfully close the transaction.

• Company ESOP counsel

• Interview trustee(s) and their team

• Provide high-level financial information

• Hire trustee team best suited for your company transaction, employees, etc.

"I'm a guy who just wanted to see his name in the lineup everyday. To me, baseball was a passion to the point of obsession." - Brooks Robinson

MANAGEMENT PRESENTATION

In-depth presentation to all professionals involved in the ESOP transaction.

• Prepare a detailed book

• Set in-person meeting to ‘sell’ your company

• Ask questions, provide answers

• Provide term sheet on all deal points

“The next time someone whines that baseball doesn’t have enough action, you can do two things: first, explain the planning, strategizing, calculating, and deception that place before every pitch. Then quote Hall-of-Fame announcer Red Barber: ‘Baseball is dull only to dull minds.’” - Zack Hample

MARKET TO CAPITAL PROVIDERS

Evaluate all your financing options to meet your liquidity goals.

• Determine desired liquidity

• Create a market

• Compare term sheets

“There are three things you can do in a baseball game. You can win, or you can lose, or it can rain.” – Casey Stengel

COMMENCE NEGOTIATIONS

Negotiate terms with the ESOP trustee and outside capital providers to achieve the best possible results.

• Offers and counter offers

• Update models

• Maintain timing and expectations

"I never smile when I have a bat in my hands. That's when you've got to be serious." - Hank Aaron

DOCUMENT TRANSACTION

Under the control of your corporate attorney, create and review all documentation for the transaction.

• Continued due diligence

• Negotiate reps and warranties

• Firm up closing date

"Baseball is ninety percent mental. The other half is physical." - Yogi Berra

DOCUMENT FINANCING

Bottom of

7

Bank and advisors run full process.

• Financial and operationall due diligence

• Capital provider required assurances

• Formal approval

• Documentation

"You gotta have fun. Regardless of how you look at it, we're playing a game. It's a business, It's our job, but I don't think you can do well unless you're having fun.“ – Derek Jeter

TRUSTEE PROCESS

The trustee team will document their understanding of the transaction.

• What makes this a good ESOP company?

• Why is the transaction financed as it is?

• SWOT analysis

• Receipt of the opinions necessary for closing

“One of the beautiful things about baseball is that every once in a while you come into a situation where you want to, and where you have to, reach down and prove something.” – Nolan Ryan

TRUSTEE PROCESS

With the right team in place, close your transaction in as little as five months.

• All parties agree

• Execute transaction and bank documents

• Establish roll-out-plan

• Celebrate the closing!

“Every day is a new opportunity. You can build on yesterday’s success or put its failures behind and start over again. That’s the way life is, with a new game every day, and that’s the way baseball is.” – Bob Feller

Secret Word Jack’s

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

Agenda – Distribution Policies

What is a Distribution Policy?

Do I need one?

Who creates it?

What information is included?

What is a Distribution Policy?

A Distribution Policy dictates when (timing) and how (method and form) participants receive their ESOP account balance after termination.

Timing

When in relation to termination of employment

Method Lump sum, Installments, or both

Form Cash, stock or both

Why do you need a Distribution Policy?

Provides details of the distribution parameters specific to the plan

Ensures adherence to statutory guidelines regarding distributions

Ensures payments are made in a nondiscriminatory manner

Can provide flexibility and simplify plan administration

Can support company financial objectives and ESOP Culture

Is it a separate document?

Written/described within the Plan Document

• Changes require a plan amendment

A separate document specifically identified in the Plan Document

• Document includes open ended language for flexibility

• Update separate document for changes

• Plan amendment not required

• Can be provided to participants

• IRS may consider part of plan document

Who Creates the Policy? Bring Everyone to the Party!

Should be drafted by legal counsel as this is a document under which the plan is operated and must meet certain requirements, but should consult with:

• Management Team/Executives

• Human Resources/Payroll

• Trustee

• ESOP Attorney

• TPA

• Non-ESOP Shareholder

Know the Legal Requirements

SpecialESOPrulesrequirethatdistributionbemadeavailableno later than:

• DDRs: must commence by the end of year after termination

• Other terminations: must commence by end of 6th year after termination

• All terminations: must be payable in form no longer than 5 substantially equal annual installments (longer for large balances)

• Exception for leveraged ESOP until loan repaid in full

• Applies only to stock acquired by the ESOP after 1986

• Can be applied to stock acquired prior to 1986 as well if chosen by the plan sponsor and in the plan document

Basicrulesforallqualifiedretirementplans,includingESOPs:

• Must permit distribution by latest of: age 65, 10th anniversary of participation, or termination of employment

• Must satisfy “minimum required distribution” rules

What are the options?

Cash Requirements each year

• Pay as you go; target benefit level

Corporate objectives – short term, long term

• Don’t want former employees to share in appreciation?

Are there exceptions?

• Is everyone paid in the same manner?

How much flexibility is there?

• What if a strategic opportunity comes along?

• Economic downturn

• Can folks at NRA keep working yet elect a distribution?

What if I change my mind in a year or two?

Elements of the Distribution Policy – Timing

Timing

Method Lump sum, installments, b

When will the distribution commence?

Method Lump sum, installments, both

Form

Cash, stock, or both

Timing – Legal Requirements

IRC 409(o)– ESOPspecificdistributionsrules

Event : Death, Disability, or Normal Retirement (DDR)

Participants must be entitled to commence benefits nolaterthanoneyear after the end of the plan year in which the event occurs

2022

2021 2023

Year of death, disability or normal retirement

Entitled to elect payment NO LATER than the end of 2022

ESOPspecificdistributionrules

• EVENT : termination for any other reason

• Participants must be entitled to benefits no later than six years after the plan year in which the event occurs

Entitled to payment NO LATER than the end of 2028

Timing – IRS Exceptions

LEVERAGED ESOP EXCEPTION

• Distribution can be delayed until the loan is fully repaid

• Commence payments beginning in the year following the close of the plan year in which the loan is repaid

• Basic distribution rules (DDR) still apply

• Do you want to use this?

SMALL BALANCE EXCEPTION ($5,000 or $1,000)

• Vested balances can be distributed in year following the year of termination

Participant consent is not required

Timing Example EXAMPLES

• Date of birth: 07/07/1959

•

Date of participation: 09/01/1983

• Date of termination: 09/15/2022 (age

63)

• Plan’s normal retirement age: 65

The plan offers distributions in the sixth plan year following the plan year of termination.

When must the participant be entitled to a distribution

Timing Example

Timing Example

Timing – Options



Can I vary the timing based on account balances

 Balances up to $25,000 in first year after termination

 Portion of balances > $25,000 in the sixth year following termination



Can I accelerate payments if we have the cash?

 “Blue Light” special



Can I limit the total amount of distributions in a year? ($1 million)

Timing to align with objectives

• Longer strategic planning goals

• Slows the reallocation of shares and repurchase obligation

• More level cash requirements

• Even benefits

• Discourages incentive to quit to gain access to ESOP benefit

• Can cash out and still delay distribution: “segregation” a/k/a

“mandatory diversification”

• Removes stock from accounts of terminated participants

• Locks in value at termination

• Allocates shares to newer employees sooner

• Ease of administration

Elements of the Distribution Policy – Method

Timing

When will the distribution commence?

Method Lump sum, installments, both.

Method Lump sum, installments, both

Form

Cash, stock, or both

Method – Legal requirements

ESOPspecificdistributionrules

• Substantially equal payments

• At least annually

• Period cannot be longer than 5 years

- If the balance is “large”’ the period can be extended, but not longer than 5 additional years.

- Large is defined in the IRC and is indexed each year.

- For 2023, the amount is $1,330,000

- For each $265,000 (also indexed), the installment period can be extended 1 year.

Method – Options

• LumpSum

• 5yearsofinstallments

• Alternative/hybridOptions

EXAMPLES:

• Lump sum for balances under a certain threshold ($20,000 or $50,000 for example) and installments for portion that exceeds the threshold

• Installment periods shorter than 5 years

• Others

Method to align with objectives Installments

• Longer strategic planning goals

• More predictable repurchase obligation

• Slows the reallocation of shares and repurchase obligation

• Discourages the incentive to quit to gain access to ESOP benefit

• Removes stock from accounts of terminated participants

• Allocates shares to newer employees sooner

• Ease of administration

Elements of the Distribution Policy – Form

Timing

When will the distribution commence?

Method

Lump sum installments, or both.

Form

Cash, stock, or both

Form – Legal Requirements

ESOPspecificdistributionrules

Participants have the right to demand distribution in the form of employer securities and (if not readily tradable) have the employer repurchase it at a fair valuation

EXCEPT:

• S Corporations

• When an employer’s charter or bylaws restrict substantially all ownership to the ESOP or current employees

• Banks

Form to align with objectives

Stock Cash

• Shares distributed and immediately redeemed by the company Lump sum payment or installments backed by a secured promissory note (very rare)

• Participant might be eligible for capital gains treatment on difference (NUA) between the market value and their cost basis (Must be a lump sum)

• Cash must be contributed to the ESOP through contributions or Sdistributions/dividends

Elements of the Distribution Policy – Other Considerations

Other items to consider:

• Segregation

• Converting shares to “other investments”

• Qualified Domestic Relation Orders

• Diversifications; In-service

• Events after termination (RMDs, Death, etc.)

• Hardship distributions

• Procedures

• New election forms needed?

Funding Repurchase Liability

• Recycle all

• ESOP contribution policy will be subject to ups and downs of repurchases

• Sometimes might not be possible without S distributions/dividends

• Redeem all with no recycling/re-leveraging

• Only new shares for employees would be from on-going ESOP loan repayments

• If no ESOP leverage, then no share allocations

• Redeem with re-leveraging

• Continually keeps some shares unallocated

• Redeem with steady contribution policy

• If repurchases > contributions: net redemption

• If repurchases < contributions: net contribution of stock out of treasury

Funding Repurchase Liability

• Valuation of Stock

• Typically use plan year-end value that precedes date of distribution or termination

• However, for any redemption or re-leveraging, must use valuation opinion dated on and delivered on the date of redemption or re-leveraging

• 80-26 loans can be used to avoid interim valuations for redemptions and/or re-leveraging

• Can get plan year-end value delivered on the last day of year to repay 80-26 loan on that date

Case Study

Company has a mature ESOP (no longer leveraged) which permits distribution elections by terminees starting with year after termination up to “available cash” declared by board of directors for that year. (But, will pay within period otherwise required if available cash has been insufficient (e.g. six years for non-DDR terminations, paid over 5 years).

• If elected distributions > available cash: Make cash available based on year of termination (oldest first)

• If elected distributions < available cash: apply segregation (aka mandatory diversification) for the difference

• Accounts remain in company stock until distributed or diversified

• Mandatory cash out of balances <$5,000

Summary – What, Why, Who, and How

A well-craftedDistributionPolicy:

• Defines when and how

• Ensures regulatory compliance

• Simplifies administration

• Considers the perspectives of all stakeholders

• Supports the objectives of the company and the ESOP

Secret Word for CE

Fountains

Accounting and Financial Reporting Implications for ESOPs

Brian J. Sharkey, CPA, CVA, CEPA Director – Business Advisory and Accounting

Kreischer Miller

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

A Guide to ESOP Accounting

• Cash Flow Cycle

• Impact to Balance Sheet

• Impact to Income Statement • How to Normalize

Warrants

Leveraged ESOP – Indirect Loan- Initial Transaction

Leveraged ESOP - Indirect Loan – Initial Transaction

Collateralize

ESOP Owner

Leveraged ESOP – Indirect Loan- Initial Transaction

Leveraged ESOP - Indirect Loan – Initial Transaction

Collateralize

Stock

ESOP Owner

Leveraged ESOP –Indirect LoanRepayment

ESOP Owner

Contribution

Repayment

Leveraged ESOP – Direct Loan - Initial Transaction

ESOP Owner

Leveraged ESOP – Direct Loan - Repayment

ESOP Owner

Financial Statement Impact

Balance Sheet Impact

• ESOP Note Receivable:

• Not reflected as an asset on the Balance Sheet

• Included as a component of Stockholders’ Equity

• Typically referred to as “Unearned ESOP Shares”

• Since it is not considered an “asset” under GAAP:

• Interest is not recorded to the income statement

• Cash received for interest is recorded directly to APIC

Post ESOP Balance Sheet Example

• Shares act as collateral for the related loan

ESOP Leveraged Shares

• Shares are released as the inside loan obligation is reduced

• Shares committed to be released may be different

• Released shares can be allocated to ESOP participants.

• ESOP shares are typically classified as:

• Restricted (unallocated)

• Released (unallocated)

• Allocated

ESOP Compensation ExpenseGAAP

• ESOP Compensation Expense is Recognized 3 Ways:

1. Release of ESOP Shares

▪ Including commitment to release shares

1. Contributions to the ESOP

▪ Not used to release shares (not used to repay inside loan)

1. Dividends on unallocated shares

▪ Not used to release shares (not used to repay inside loan)

Leveraged ESOP - Indirect Loan – Repayment

Leveraged ESOP Indirect LoanRepayment

$100,000 Contribution

$100,000 Repayment

Owner

ESOP

Post ESOP Balance Sheet Example

Release of ESOP Shares

• As ESOP shares are released, the amount charged to compensation expense is equal to the fair market value of the shares committed to be released.

• Example:

• Company makes $100,000 contribution to ESOP Plan

• ESOP returns the $100,000 to repay inside loan

• 1,000 shares get released (FMV = $150 per share)

• Compensation expense = $150,000

• Difference goes to APIC

ESOP Dividends

• Dividends on ESOP shares allocated to participants are charged to retained earnings.

• As opposed to dividends on unallocated shares, which are recorded as compensation expense.

• Example:

• Company pays $100,000 dividend to an ESOP

• 20% of the shares are allocated to participants

• $80,000 of dividend is treated as compensation expense

• $20,000 is treated as normal distribution (equity)

Income Statement Impact

Income Statement Impact

• Example:

• Company makes $100,000 contribution which is used to repay inside loan

• FMV of shares released = $150,000

• Company makes $100,000 distribution to ESOP

• 80% of shares are unallocated

• Company makes additional $30,000 contribution to ESOP

• Total ESOP Compensation = $260,000

• ($150K + $80K + $30K)

• “Real” ESOP cash flow = $130,000

What if Dividends are Used to Repay the Inside Loan

What if Dividends Are Used to Repay Inside Loan

• Depends on whether shares are allocated or unallocated

• Unallocated:

• Same treatment as ESOP contributions

• Compensation expense = FMV of shares released

• Allocated:

• Remember, if not used to repay loan, then booked to retained earnings (like a normal distribution)

• 1st book FMV of shares released to ESOP compensation expense

• 2nd reduce the ESOP compensation expense by actual dividend (cash) paid and record to retained earnings

Dividends Used to Repay Inside Loan

• Same scenario as previous slides ($100k dividend/80% unallocated) - assume all dividends are used to repay inside loan

• $80,000 Unallocated dividend:

• FMV of shares released = $120K

• ESOP comp. exp. = $120K

• Reduction of retained earnings = $0

• $20,000 Allocated dividend:

• FMV of shares released = $30K

• Reduction of retained earnings = $20K

• ESOP comp. expense = $10K

Income Statement Impact

Income Statement Impact

• How to find the adjustments:

• ESOP Fair Market Value Compensation Adjustment

• Find on Statement of Stockholders’ Equity

• Find on Statements of Cash Flows

• Distributions on unallocated shares

• Take the difference between the Statement of Cash Flows and Statement of Stockholders’ Equity

• ESOP Footnote

Statement of Cash Flows Example

Statement of Cash Flows Example

Non-leveraged

Nonleveraged

1. No unearned ESOP shares

1. Cash contributions are treated as normal ESOP compensation expense, equal to cash paid.

1. Stock contributions are recorded to ESOP compensation expense equal to FMV of the shares contributed.

3 Major Takeaways

Dividends Used to Repay Inside

1. Inside loan between Company and ESOP is contra equity

1. Distributions on unallocated shares are treated as compensation expense.

1. Contributions or distributions used to repay the inside loan (release shares) creates compensation expense equal to the FMV of the shares released.

ESOP Warrant Accounting

• Initial measurement

• Annual adjustments

• Upon exercise

• IMPORTANT ASSUMPTION: Holder owns a call/put option

Initial Measurement

• Consideration received for selling shares to ESOP –

Cash –

Note Receivable –

Warrants

• Each need to be valued and recorded on Company financials –

Cash = cash paid –

Warrants = ????

–

Note Payable = remainder

Example Time!

• Owner sells 100% of stock for $10MM in exchange for:

–

Cash = $3,000,000

–

Note Receivable = $7,000,000 (face value)

–

Warrants!!!

• Equity is reduced by $10MM (debit) –

Cash = $3,000,000 (credit)

–

Warrants = ????

–

Note Payable = $7,000,000 (credit)

Example Time!

• Warrants have a deemed value of $175,000 (AT ISSUANCE)

–

Cash = $3,000,000 (credit)

–

Warrants = $175,000 (credit)

–

SORT OF CORRECT

Note Payable = $6,825,000 (credit)

• Recommended Entry: –

Cash = $3,000,000 (credit)

–

Warrants Liability = $175,000 (credit)

–

Note Payable = $7,000,000 (credit)

–

Warrant Discount = $175,000 (debit)

DO THIS

Shown on the financial statements together (netted)

Value of Warrant at Issuance

• How is the fair value of the warrants measured at issuance?

– Typically using the Black Scholes pricing model

• In a perfect world, the value at issuance will approximate the value upon exercise.

• Unfortunately, nothing is perfect… adjustments will be needed each year.

Annual Warrants Adjustments

• Recap: – Warrant Discount = $175,000 (contra-debt)

– Warrant Liability = $175,000

• Warrant discount is amortized (accreted) into interest expense over the term of the associated loan (using effective interest method).

–

Debit –

–

Interest Expense

Credit – Warrant Discount

• Warrant Liability is adjusted at the end of each reporting period to its current fair market value.

–

Other side of the entry is “change in FMV of warrant liability”

Upon Exercise of Warrants

• Warrant Exercise Entry: – Warrant Liability = DEBIT – Cash = CREDIT

• Upon exercise holders receives a cash payment for the difference between the current value and the strike price (call/put option).

• Note: Warrant Discount amortization period may be different that the warrant’s life. Said differently – the date the warrant becomes exercisable may be shorter (or longer) than the term of the associated debt.

Secret Word for CE

Joe’s

Becoming a Strengths-Based Organization

Lori Atone

L&D Director

Diana Hargenrader

Human Resources Director

Erica Roudebush Senior Sales Consultant

Blake Theademan Customer Support Specialist

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

TVF

• Founded in 1974

• Leading Global Fabric

Supplier

• 100% Employee Owned since 2010

About Us

Empowered Ventures

• Founded in 2020

• 100% Employee-Owned Diversified

Holding Company

• TVF + Firstar + Paramount Plastics

With your non-dominant hand, write the sentence below as many times as possible for 1 minute!

ESOPS ARE GREAT!

How did that feel?

Raise your hand if you almost always….

Raise your hand if you almost always….

Raise your hand if you almost always….

Raise your hand if you almost always….

Raise your hand if you almost always….

What is a Talent?

A naturally recurring pattern of thought, feeling, or behavior that can be productively applied.

What Talents Do You Have?

• Effortlessly starting conversations

• Seeing patterns in data

• Naturally having a positive outlook

• Thinking in an orderly manner

• Easily and naturally influencing others

Why is it Important to Utilize Strengths?

• 3 times more likely to report having an excellent quality of life

People who use their strengths every day are:

• 6 times more likely to be engaged at work

• 8 % more productive

• 15% less likely to quit their jobs

Types of Strengths Assessments: What Have You Used?

Why did we choose CliftonStrengths?

•Cost effective

•Focus on strengths NOT weaknesses

•Straightforward / easy to understand

•Not a huge time commitment

•Can apply to both work life / personal life

TVF’s Strength Journey

• Management assessment / workshop

• Company wide assessments

• TVF StrengthsGrid

• Workshops

• Weekly Communications board

• Lessonlys

Workshops

Some questions that showcase differences and similarities in people

• Which of your top strengths do you appreciate and why?

• Which of your top strengths frustrate you and why?

• How has your top strength helped you be successful at work?

Best Practices For Implementing Strengths

Choose assessment that works best for your company

Design workshop that fits your team

Share the “Why”!

Incorporate strengths into daily conversations

Make it fun

Erica's Top 10 Strengths

1. Woo

2. Maximizer

3. Empathy

4. Strategic

5. Positivity

6. Individualization

7. Communication

8. Adaptability

9. Futuristic

10. Activator

Diana's Top 10 Strengths

1. Empathy

2. Developer

3. Discipline

4. Responsibility

5. Achiever

6. Belief

7. Adaptability

8. Positivity

9. Harmony

10. Learner

Lori's Top 10 Strengths

1.

2.

3. Activator

4.

5.

6. Maximizer

7. Individualization

8. Input

9. Arranger

10. Positivity

Ideation

Learner

Strategic

Futuristic

Blake's Top 10 Strengths

1. Individualization

2. Strategic

3. Restorative

4. Communication

5. Ideation

6. Woo

7. Competition

8. Activator

9. Arranger

10. Input

Impact on Hiring and Engagement

Example: Accounting Department

Final Candidate Accounting Director Accounting Manager

Strengths Assessments Amplify EO Mindset

Utilizing strengths increases sense of purpose and agency

ESOP companies can more easily and naturally create opportunities to use strengths

Knowing your strengths empowers you to do your best work

Secret Word for CE

Union Station

Slido Word Cloud! Share one of your natural strengths!

Employee Owner

Captive Health Insurance for ESOPs: More Than Just Cost Savings

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

Why Are We Here?

Little Control

Lack of Options

Today’s Market

Fully Insured Trajectory

Funding Options

Fully Insured

Pooled Stop Loss / Consortiums LevelFunded

OWNERSHIP Rent

Self-Funded

ICS Group Captive

Your Options

Available for Smaller Employers

Fixed Annual Payment Plan Design Flexibility

Claims Information

Reward for Performance

Manageable Risk Level

Pricing Stability

Group Purchasing Power

Peer Group Support & Sharing

What is a Group Captive?

ESOP 1

ESOP 2

ESOP 3

ESOP 4

ESOP 5

ESOP 7

ESOP 8

ESOP 6

Introducing…

Carrier:

Effective Date: 7/1/2021

EE Size Range: 50-1000 EEs (Avg. 222)

% Fully Insured: 60%

% Self-Funded: 40%

Common industries:

Construction Engineering Manufacturing Distribution Insurance Services

A True Partnership

Program Advisor

NCEO Liaison

Captive Consultant

Captive Operations

ESOP Expert & Oversight

Communication

Marketing

Why Should You OWN?

Are We a Good Fit?

Long-term Business Vision Ownership Mindset

Desire Control & Stability

Care About Your Employees’ Health

Understand “Risk for Reward”

50 or More

Enrolled Employees

Financing Risk

EB Captive Structure

Captive Structure

What Does this Mean for Employees?

What Remains the Same: Plan Design Broker Support

Individual Stop Loss Level*

*If Self-Funded today

**Dependent on current

Network**

What is Different:

Stop Loss Carrier

Self-Funded*

*If Fully Insured today

The OWN Health Difference

Creating a Cleaner Pool

What is it?

1 2 3 $

Employee

Why do it?

Align Company Culture to Increase Engagement

Drive Down Cost/ Create Employee “Skin in the Game”

YOU Have Control

The captive provides you with levers to gain control!

Cost & Clinical Strategies

Pharmacy Spend & Rebate Options

Plan Design Language

Tailor programming to utilization patterns

Options to carve out Rx to drive down cost and retain rebates

Customize plan language & enhance benefits

Cost Containment

Company Profile

Risk Identification & Reduction

Results

Cost Trend Case Studies

Creating a Cleaner Pool

Key Findings:

Source:

Case Study #1

Total Cost Renewal Stability

Iowa-Based company with 200 enrolled employees; previously fully-insured prior to joining an ICS captive.

$3,521,135

Case Study #2

Captive Profit & Total Savings

Ohio-based company with 55 enrolled employees; previously self-insured prior to joining an ICS captive (with performance-based profit distribution).

*2020 estimate based on data through June 2021.

OWN Health: Member Testimonial

Summary & Next Steps

Better Together

Member Meetings

• Wellness programs

• Ways to re-invest profit & savings

Quarterly Webinars

• Transparency allows for all members to be held accountable

• Grow professional networks

• Generate new ideas

Enhance Company Culture

• Rx savings & cost containment tools

Educational Webinars

Next Steps

One-on-one discussions with ICS EB Team Member

Submit information for proposal

Current Plan Design Proposal Review with ICS

Complete Census (DOB, DOH, Zip Code, Plan Election, etc.)

Current Rates

Information Needed for Proposal Join the captive

Claims Experience

Secret Word Hallmark

THANK YOU!!

Color Wars for National Employee Ownership Month

Erin O’Connor Project Manager

ESOP Communications Committee Chair

Dan Vaccarella

VP of Finance

ESOP Communications Committee Treasurer

CE Requirements - Onsite

1. Scan the session QR Code on the door or directional signage nearby

2. Engage in the session content for all 60 minutes.

3. Input the secret word in the CE Session Survey. The secret word will be revealed in the speaker's presentation.

4. Complete the CE Survey.

BAMCO’s History

• Founded in 1986

• Engineer, fabricator, and installer of architectural metal panel systems

• Two founders still our CEO & Sec./Treasurer today

• Average tenure of employee is 13+ years

• Silos in work force due to nature of industry

Path to Employee Ownership

• In 2018, founding owners sold 100% of BAMCO to an ESOP

• Deciding factors for the sale:

• Method for succession planning

• Way to reward employees who had built BAMCO along the way

• In 2021, ESOP Communications Committee formed to drive culture shift

Shaping the Ultimate Team-Build Exercise

• Wanted to capitalize on excitement from previous year, and top our celebration by:

• Encouraging new connections, especially between shop, field, and office

• Fostering a strong sense of “team” in employees

• Enter the idea for Color Wars

• Developed into a month-long, team-building competition involving every single member of the ESOP

• Co-supervision by the ESOP Communications Committee and BAMCO’s executive management team (team captains)

Company-Wide Announcement & Event Planning

Important Communications Throughout

• Posted on Company Bulletins and Intranet (Daily Communications):

• Event Calendar with Participants per Event

• Leaderboard of Team Scores

• Email Communications:

• Full Team Rosters

• EVENT RULES

» Sent to event participants the morning of their competition

» Reviewed before event began

Enthusiasm from Multiple Fronts

• Announcements

• Prior to Event

• Post Event

• Tracked on Instagram

• Internal Followings

• External Followings

• Perhaps some boasting…

• https://www.instagram.com/ gobamco/

Team-Oriented Events/Activities

Themes of Events and Activities

• No individual contests or contributors

• Collaborative activities were highly prioritized

 Cornhole

 Puzzle build

 Lego build

 Kan-Jam

• Healthy mix of activities to allow employees with differing skill sets to show them off

 Free throw and golf putting competitions

 Jeopardy and “Family Feud” competitions

More Events

Through Round 11…..

Cumulative Color Wars Score Through 11 Events

• Blue Team Lead through Round 10

• Feared a “Blow-Out”

• All Teams Rallied

• Internal coaching and team building

• White team Lead through Round 11

• 3 of 4 teams had chance to be Champions

• Captains Challenge was for the win!

• Couldn’t ask for better suspense!

Completed Events

Blue White Red Black

Captains & Captain Challenge

• Buy-in from Leadership was extremely important

• Needed them to champion the events and drum up excitement

• Employees loved “standing in” as Team Captains when they weren’t available for every competition

• Captains Challenge was the final event before OwnerFest

• Reversed the roles and allowed employees to coach BAMCO’s Leadership Team

OwnerFest & Feedback

• Employees loved the competition and made it a point to thank us for organizing the month

• Many people specifically cited that they had spoken to so many people they’d never interacted with before over the course of Color Wars

• Committee members received suggestions for more team-centric activities:

• Company softball team

• Basketball hoop for pick up games

Why it Worked & Lessons Learned

Why It Worked Lessons Learned

• Competitive spirit!

• Accountability for self AND team

• Ability to break out of silos

• Sense of comradery with teammates

Final Outcomes

Best Outcome: Three members of most under-represented groups in company joined Committee for 2023.

Participation from severely under-engaged groups has been significantly trending up following Color Wars.

And… the Red Team was victorious!

Color Wars for National Employee Ownership Month

Erin O’Connor Project Manager

ESOP Communications Committee Chair

Dan Vaccarella

VP of Finance

ESOP Communications Committee Treasurer