| The global business community is
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| | assets. ESOPs can be found in major firms
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| recognizing the benefits of employee
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| | like United Airlines and Home Depot.
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| ownership, from tax savings to improved
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| | Thousands of smaller, closely held
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| work performance, as more major firms
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| | companies also sponsor ESOPs. Employees
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| worldwide offer stock as
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| | can own anywhere from a few percent to
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| compensation.This material is drawn
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| | 100 percent of the company.In recent
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| substantially and directly from the
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| | years, there has been an explosive
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| National Center for Employee Ownership, a
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| | parallel growth in employee ownership
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| nonprofit membership and information
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| | through 401(k) plans. The major factor in
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| organization in Oakland,
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| | this growth has been an increasing
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| California.Employees have become major
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| | tendency for companies to match employee
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| players in capital ownership worldwide
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| | contributions to the plans with company
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| through employee stock ownership plans
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| | stock. Employees also are putting more of
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| (ESOPs), according to a new analysis.
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| | their own investments in company stock.
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| Touted as the "the ultimate instrument of
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| | Recent estimates indicate more than half
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| corporate finance," a well-designed ESOP
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| | of all 401(k) matches are made in company
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| successfully accomplishes major corporate
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| | stock. It is estimated that there are at
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| goals to provide owners with a superb
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| | least 2 million participants in these
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| return on capital investment, unequalled
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| | plans, about 2,000 of which have a
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| tax advantages and rewards long term
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| | majority of their assets in company
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| loyal employees far better than the
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| | stock. Employees own about $250 billion
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| common retirement plans, such as 401(k)
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| | in company stock through 401(k)
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| and profit sharing plans. Rewards, such
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| | plans.Employees Prefer StockPeople want
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| as stock appreciation, are quantifiable,
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| | stock as pay. More than 16 million
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| but there also is what can be called the
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| | employees now get stock as part of their
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| "adventure reward."According to the
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| | pay. Why does this number continue to
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| Arizona ESOP Group LLC , employees who
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| | increase? There are numerous reasons.
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| share in equity appreciation begin to
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| | Three of the more salient are:Tax
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| think and act like owners, and owners
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| | incentives for owners and their companies
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| always work harder than employees do. To
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| | are unequalled by any other financial
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| illustrate, Home Depot's stock ownership
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| | strategy.There is a growing corporate
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| program created more than 1,000
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| | desire to create an "ownership culture" -
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| millionaires in 1998, according to
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| | owners always work harder than
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| Bernard Marcus, cofounder of Home Depot.
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| | employees.Employees are asking for it.In
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| Statistics reveal that 17 to 18 million
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| | the past 25 years, the stock market is up
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| U.S. employees now own from $650 million
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| | more than 11 times, while the real median
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| to $1 trillion in stock through employee
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| | wage is up a few percentage points.
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| stock ownership plans, 401(k) plans and
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| | Business owners and HR professionals
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| broad-based stock options, and the
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| | should take note: Employee equity
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| appreciation potential is dramatic.Global
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| | participation will be a major theme in
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| GrowthThe worldwide business community is
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| | the 21st century. The federal govern-ment
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| recognizing the beauty of sharing equity
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| | recognizes this and encourages businesses
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| with employees. As impressive as the
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| | to become ESOP sponsors by creating
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| growth of employee ownership in the
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| | working capital by enjoying tax
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| United States has been, there have been
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| | deductions for contributions of stock to
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| even more striking developments abroad.
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| | their ESOP. Using an ESOP to borrow
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| The most important are:Russia: Most large
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| | affords the unique advantage of tax
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| enterprises in Russia have been sold to
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| | deducting principal payments as well as
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| their work forces, while thousands of
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| | interest.Finally, there has been rapid
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| other businesses have become employee
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| | growth in companies making stock options
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| owned in other formerly socialist
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| | available to most or all employees. Most
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| countries. Enterprises with more than 200
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| | technology companies that use stock
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| employees have been sold primarily to
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| | options now make them available to most
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| their work forces. The average ownership
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| | or all employees, according to recent
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| by nonmanagement employees is about 55 to
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| | surveys from Share Data, a stock options
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| 65 percent. Employees hold their stock as
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| | plan administration firm. This is another
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| individuals and, so far, relatively few
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| | method of building employees into equity
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| have decided to sell. In the future, many
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| | participation, but without the same
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| of these enterprises are likely to be
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| | preferential tax benefits enjoyed by both
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| sold in whole or in part to investors or
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| | ESOP sponsors and employee
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| other companies unless legal changes are
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| | participants.At the same time, more and
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| made.China: Millions of employees are
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| | more major companies, such as Pepsico,
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| becoming owners in their companies, and
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| | Starbucks and Whirlpool, are giving
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| both the central and local governments
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| | options to most of their employees. While
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| are seriously exploring the idea of large
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| | firm estimates are not possible, it
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| scale enterprise reform through employee
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| | appears that at least 5 million employees
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| ownership. Several local governments have
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| | participate in these plans. This is a
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| sold off most of their enterprises to
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| | potential value in the hundreds of
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| employees, and the central government now
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| | billions of dollars.The trend toward
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| is seriously investigating implementing
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| | employee ownership is being fueled by
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| employee ownership on a wide
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| | three factors. First, where employee
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| scale.Eastern Europe and Former Soviet
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| | ownership has been around long enough to
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| Republics: Most of these countries have
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| | study, especially in the United States,
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| provisions to encourage at least minority
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| | data clearly and continually shows a
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| employee ownership in privatized
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| | strong positive relationship with
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| enterprises. In some countries,
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| | corporate performance when these plans
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| particularly Slovenia, Hungary and
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| | are tied to a participative management
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| Poland, hundreds of enterprises have
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| | philosophy. More and more companies are
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| become majority employee owned.England:
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| | concluding that sharing ownership and
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| Legislation similar to U.S. ESOP law has
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| | encouraging employee input makes good
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| been in place since the late 1980s.
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| | economic "dollars and sense." Second, the
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| Recent changes have made it more
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| | privatization of state owned enterprises
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| attractive and several hundred companies
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| | is more politically palatable if
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| now have broad ownership. A few dozen
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| | employees are included as owners.
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| large companies now are majority employee
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| | Finally, to encourage businesses to
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| owned.Canada: Most Canadian provinces
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| | sponsor an ESOP, the federal government
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| have legislation providing substantial
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| | offers tax savings and cash advantages
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| tax credits (up to 40 percent) for
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| | too rich to overlook.American
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| investment in employer stock. Several
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| | Compensation Association Journal,
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| hundred companies have taken advantage of
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| | February, 2005For 25 years Frank Amato
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| this process.Jamaica: A 1994 law in
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| | has been designing ESOPs and carving out
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| Jamaica provides strong incentives for
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| | key employee plans. He is Managing Member
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| companies to share ownership with
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| | of the Arizona ESOP Group, LLC and can be
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| employees.Japan: Ninety percent of
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| | reached at (480)222-0199 and
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| Japan's publicly traded firms provide
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| | (480)227-3064.Frank A. Amato, President
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| mechanisms for employees to buy company
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| | Arizona ESOP Group LLC.
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| stock. Participation in these plans
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| | An Employee Stock Option Plan Consulting
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| extends to most employees, and the
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| | FirmGraduate 1970 from Michigan State
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| average per-employee holding is about
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| | University, B.S. in Economics.From 1970
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| $16,000. However, these plans generally
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| | through 1976, Captain U. S. Air Force,
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| result in employees owning only about two
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| | fighter pilot during the Vietnam
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| to three percent of their firms.ESOP
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| | era.Member, National Center for Employee
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| BeginningsThe trend toward employee
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| | Ownership (NCEO).He has spoken before the
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| ownership started in the United States in
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| | Arizona State Legislature Senate Finance
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| the 1970s, when ESOPs were given specific
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| | Committee and has written numerous
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| tax benefits and regulatory guidelines.
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| | articles for various local and national
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| Today, more than 11,000 of these and
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| | business publications.Visit message on
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| similar plans cover almost 9 million
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| | ESOPs at:
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| employees who own about $213 billion in
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| | message from Frank A.
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