Employee Stock Ownership Plan ESOP II

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Jerome Warner
5 years ago
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1 Employee Stock Ownership Plan ESOP II

2 Agenda 1. Ownership History 2. Why ESOP II? 3. ESOP II Details 4. ESOP Account Rules -Changes/ Differences 5. Corporate Governance 6. Looking to the Future 2

3 Urban Engineers, Inc. Stock Ownership 3

4 Urban Engineers, Inc. Stock Ownership ESOP I 4

5 Urban Engineers, Inc. Stock Ownership 100% ESOP II 5

6 Urban Engineers, Inc. Stock Ownership ESOP I ESOP II TOTAL ESOT Ownership 42% 58% 100% ESOT Shares Purchased 57,500 72, ,531 (ESOT = Employee Stock Ownership Trust) (ESOP = Employee Stock Ownership Plan) 6

7 Why ESOP II? Tax advantages to both: Selling Shareholders & Urban Retain culture of Urban Engineers Reinforces commitment to company Provides a Secondary Retirement vehicle to our employees Allows NEWshares to be allocated 7

8 ESOP II - Details 8 Transaction was completed December 30, 2013 Transaction Debt incurred Bank Loan (External) is for five (5) yrs (like a mortgage) ESOP Acquisition Loan (Internal) is for eight (8) yrs Notes issued to other selling shareholders ESOP Trust (owner of shares) External ESOP Trustee engaged Urban Engineers, Inc. s Board of Directors Two (2) additional EXTERNAL Directors added by June 30, 2014

9 ESOP Acquired Shares Release ESOP I 57,500 shares 9

10 ESOP Acquired Shares Release ESOP I & ESOP II (planned) 57,500 shares 72,031 shares 10

11 ESOP Acquired Shares Release ESOP I & ESOP II (estimated) 26,900 shares 57,500 shares 72,031 shares 11

12 Changes Differences (In the Plan) N O N E (to speak of) 12

13 ESOP Account Rules Eligibility / Allocations / Vesting / Distributions All the same Rules Statement format and content MAY change To account for the two (2) separate Blocks of Shares Required to maintain separate records for each block of stock purchased by the Trust 13

14 Eligibility Still the same Be 18 years or older Complete 1,000 hours during the plan year That is all there is to it When do you Enter? Depends 14

15 ESOP Eligibility Timeline: Hired Early in the Year 1/1/13 1/1/14 1/1/15 4/15/13: Hire Date ~10/15/13: Completes 1,000+ Hours, Age 18+ Enter ESOP on January 1,

16 ESOP Eligibility Timeline: Hired Late in the Year 1/1/13 1/1/14 1/1/15 8/15/13: Hire Date ~6/30/14: Completes 1,000+ Hours, Age 18+ Enter ESOP on January 1,

17 Allocations Still the same Need to be eligible Then receive allocation for any Plan Year in which: Work 1,000 hours AND Either: you are employed on Sept 1 or Dec 31 Or: in the year of your retirement, death, or disability How many shares depends on: Your earnings in proportion to gross earnings & The number of shares being allocated 17

18 Vesting Again --Still the same ****** Vesting on ESOP I shares transfers to the new ESOP II shares You do not start at zero for ESOP II Shares become vested based on years of service 1 year of service is 1,000 hrsworked in a plan year 18

19 Vesting Schedule: 6-Year Scaled Years of Service Less than or more Vesting % 0% 20% 40% 60% 80% 100% 19

20 Distributions You receive your benefit only after you are no longer employed by Urban One set of rules applies for retirement, death or disability Second set of rules applies for resignation or termination Separate presentation for Distributions NOTE: Only your vested amount is available for distribution 20

21 Disclosure Requirements Still the Same Annually Participant Statement Summary Annual Report (SAR) ESOP Plan Document Available for review by any Participant Summary Plan Description (SPD) Brief description of the ESOP Plan Document Provided to all current participants and to new participants after they are eligible On file and available on 21

22 Selecting a Beneficiary Fill out a beneficiary form and identify who is to receive your ESOP benefit in the event of your death MUST SIGN Form Spouse is beneficiary unless s/he consents to someone else on the beneficiary form (in writing) Form is available with new hire packet or on K@U and MUST be returned to HR 22

23 Corporate Governance No Change here either ROLES have NOTchanged -just the parties responsible for them 23

24 Corporate Governance Before ESOT Shareholders Ed & Joe Minority Shareholders (Trustee) > 51% appoint and oversee elect Board of Directors ESOP Participants hire and oversee CEO: Ed D Alba Senior Leaders when meet eligibility requirements hire and oversee Employees 24

25 Corporate Governance Now Shareholder(s) of Urban Engineers, Inc. Principals, Associates are replacedby the 100% owner - the ESOT Board of Directors Ed & Joe are still directors but additional directors will be added Urban Management Management team still in control of the corporate decisions (day to day operations) 25

26 Where does the ESOP fit? ESOT (Shareholder) ESOP Trustee 100% select elect appoint and oversee Board of Directors ESOP Participants hire and oversee CEO: Ed D Alba Senior Leaders when meet eligibility requirements hire and oversee Employees 26

27 Where does the ESOP fit? Shareholder ESOP Trustee select elect ESOP Participants when meet eligibility requirements appoint and oversee hire and oversee hire and oversee Board of Directors CEO: Ed D Alba Senior Leaders Employees advise select Day-to-Day: constantly improve the business ESOP Communication Committee 27

28 Bottom Line ESOT owns 100% of Urban Engineers, Inc. All profits/equity goes to the Trust ESOP participants receive the entire profit The ESOP creates an opportunity to share wealth YOU help create even more than before The data is on your side: it can be very successful No guarantees, success depends on company s ability to thrive 28

29 The Challenge Ahead Opportunity to build and MAINTAIN wealth How can YOU help? Become a valuable asset to company performance Utilize all resources Urban provides Motivate and help others to succeed Maintain a vast perspective about problem solving 29

30 End of Presentation QUESTIONS? 30

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