• Canadian employee ownership,  Employee Ownership,  Employee Ownership Trust,  EOTs,  ESOPs in Canada,  Founding Owners,  Succession planning

    What to know about the new EOT in Canada

    Employee Ownership Trust (EOT) is in Canada Canadian business owners may be curious about a possible new option when considering an employee ownership transition; the EOT. Employee Share Ownership Plans in Canada have been used by business owners as they are shown to facilitate numerous benefits; increased retention, engagement, productivity, and profit. They can also improve the country’s economy by spreading the wealth more fairly, protecting small businesses and local work, and improving resiliency of these businesses. The government had previously announced the creation of an Employee Ownership Trust (EOT) in the 2023 budget and have now confirmed it’s creation in the Fall Economic Statement along with announcing tax incentives for business owners…

  • Canadian employee ownership,  Culture,  Employee Ownership,  ESOP Benefits,  ESOPs in Canada,  participative culture

    Recognition and Culture to create Engagement

    As a business owner, you know how important it is to attract and retain top talent, so you’ve created an employee share ownership plan; recognition and engagement are important. This can be a great strategy to offer recognition of employees’ efforts in order to increase engagement and retention. Recognition and Engagement I recently read an article in Benefits and Pensions Monitor called “How recognition bolsters engagement and shields employees from burnout”, which indicated a few things that align with ESOPs. A report from Workhuman and Gallup, ‘Empowering Workplace Culture Through Recognition’ shows employees who believe that recognition is an important part of their organization’s culture are 3.7 times as likely…

  • Canadian employee ownership,  Capitalism and Employee Ownership,  Employee Ownership Trust,  EOTs,  ESOPs in Canada

    EOT Announcement in Budget and why it probably doesn’t mean much for Employee Ownership

    Hello ESOP Community, The government has proposed legislation regarding employee ownership trusts (EOTs) in the 2023 budget. Any talk about ESOPs in Canada is extremely positive and will bring great awareness to Employee Ownership in general. The government has provided some detail compared to what they said in 2021 and 2022 and announced implementation of EOTs by January, 2024. Unfortunately, while this could provide an additional mechanism for how to structure a Plan in certain limited circumstances, the proposed EOT has really missed the mark and the government does not seem to have listened to the recommendations given to create more Employee Ownership. These limited circumstances for its use would…

  • Canadian employee ownership,  Employee Ownership,  Employee Ownership Trust,  employee-owned company,  EOTs,  ESOP Benefits,  ESOPs in Canada,  Founding Owners,  income equality,  Owners,  Retention,  Succession planning,  Talent attraction

    EOTs: Are Employee Ownership Trusts right for Canada?

    Originally published Jan 2023. Updated March 31, 2023 and May 3, 2024. Employee Ownership Trusts in Canada Overall, there are a couple of ways to achieve “Employee Ownership” in Canada. EOTs could be an another type of structure to achieve Employee Ownership depending on the goals the owner would like the plan to achieve. Employee Share Ownership Plan (ESOP) Worker Co-op The main difference between these two is that votes are equal in a co-op whereas in an ESOP votes are dependent on the shareholders’ type of share (voting or non-voting) and how many shares they own.  In Canada, we consider an ESOP the umbrella term, but there are different…

  • Canadian employee ownership,  Communication,  employee-owned company,  ESOP Benefits,  ESOPs in Canada,  Founding Owners,  participative culture,  Succession planning,  Taxes

    5 questions business owners ask about ESOPs in Canada

      What are the tax benefits to owners and employees?  When setting up an ESOP in Canada it is important to know there are no federal laws that govern ESOPs specifically. ESOPs are set up following securities legislation and The Income Tax Act of Canada. However, a major consideration to designing a plan is the tax treatment to employee shareholders. Plans can be designed so that employees of a Canadian Controlled Private Corporation (CCPC) who become shareholders would not be subject to tax when getting the shares and can access capital gains tax treatment when the shares are sold (50% of the gain is taken into income and taxed at…

  • Canadian employee ownership,  Employee Ownership,  Employee Ownership Trust,  employee-owned company,  EOTs,  ESOP Benefits,  ESOPs in Canada,  income equality,  Owners,  Retention,  Succession planning,  Talent attraction,  Wealth gap

    Employee ownership interest is surging

    July 18, 2022: FriesenPress announces ESOPs in Canada now a bestseller as many search for employee ownership information in Canada. More and more business owners are reading about Employee Share Ownership Plans or ESOPs. ESOPs can be a smart way to sell your company and a great way to attract the best employees. Owners and professional advisers are turning to the practical guide, ESOPs in Canada, to learn more about how to sell to employees successfully and employee ownership in general. Interest in employee ownership got a boost in February when Budget 2022 stated that the federal government plans, “to create the Employee Ownership Trust—a new, dedicated type of trust…

  • Canadian employee ownership

    How mini markets maintain a participative culture in an ESOP

    Whether it be for a down payment or university tuition of a dependant we all run into larger than life expenses from time to time. When it comes to an ESOP, a mini market can often help deal with these issues. In an established ESOP the Plan Administrator (typically the Board) has the discretion to create in the future an internal market for share trading where ESOP shares may be bought and sold. This is referred to as the Mini market. If implemented, it would be open to employees who own ESOP shares. Trades would be administered by the Company in order to facilitate the buying and selling of shares. The…

  • Canadian employee ownership,  Communication,  Culture,  Employee Ownership,  Employee Ownership Trust,  employee-owned company,  EOTs,  ESOP Benefits,  ESOPs in Canada,  participative culture,  Retention,  Succession planning,  Talent attraction

    Canadian ESOP design and implementation in the works

    What an interesting spring it has been, we’ve seen Employee Ownership Trusts (EOTs) development proposals in the budget, in the news, and have been very busy in our offices. In June’s newsletter, we thought we’d share with you a current clients’ Canadian ESOP design and implementation. ESOP Client in the works: We currently have a client in the construction industry with about 100 employees in stage two of our two-stage participatory design and implementation process. This client came to us last year and filled out our feasibility survey online. Upon completing the feasibility review and initial meetings with the client we were able to begin the stage one process to assess if an ESOP would…

  • Canadian employee ownership

    Predictability in your ESOP

    Social psychologists say that the root of organizational trust is predictability. Surprise is the opposite of predictability, and although it is impossible to eliminate surprises, company leaders should make it their personal goal to never be the source of an unnecessary surprise. Companies can reduce surprises and be more predictable in a number of ways, all of which have the impact of increasing levels of trust. Communication cycles: Many employee-owned companies communicate in a series of interlocking cycles. They send weekly (or daily) email updates about the state of the company. They have monthly department meetings, quarterly newsletters, and annual shareholder meetings. They have elections every July for their employee…

  • Canadian employee ownership,  Communication,  Coronavirus,  Culture,  employee-owned company,  ESOPs in Canada,  participative culture

    ESOP Town Halls go virtual

    At ESOP Builders, we know there is value in doing things face to face, however certain circumstances require conducting business virtually. And why not conduct more and more business virtually? It’s almost more challenging to not conduct work virtually since there is motivation to do so in the form of COVID restricting in person contact, and ease or convenience to do it in the form of user-friendly technology. As our previous ESOP clients will know, a key step in our implementation process is to have a Town Hall with employees to describe and explain the program, as well as educate and answer questions. Recently, however clients in the middle of…

  • Canadian employee ownership,  Culture,  employee-owned company,  ESOP Benefits,  ESOPs in Canada,  income equality,  participative culture,  Wealth gap

    An economic crisis could be the right time to start an ESOP

    While many businesses deferred thinking about implementing a shared ownership plan back in April, now may just be the right time to start taking action. Businesses have adapted and started to see the beginning signs of operations picking up again. There are around 7,000 ESOPs in the US according to Mary Joseph’s article in Forbes (2020). A Deloitte (2018) found that about three quarters of publicly traded companies offer ESPPs (Employee Stock Purchase Plan). However, we want to see Canadian plans continue to rise. A plan can be set up many ways driven by the goals of the owner, the company, and the participants. Joseph outlined some reasons why an…

  • Canadian employee ownership,  Communication,  Culture,  ESOP Benefits,  participative culture

    The magic ingredient for creating a successful ESOP

    Employee ownership works. It makes companies, on average, better, faster, and stronger. The typical employee-owner stays with his or her company longer, and many of them come up with the kinds of creative ideas that can push expenses lower than managers thought possible, or that open up new lines of business. Overall, the statistics show that, on average, everyone comes out ahead with employee ownership. Not surprisingly, some companies do far better than their peers, and some employee-owned businesses do not get any performance benefit at all, or may even do worse.  What separates the companies that outperform from the ones that underperform? A successful ESOP requires open communication. The…

  • Canadian employee ownership,  Communication,  Culture,  Employee Ownership,  ESOP Benefits,  participative culture

    Every new ESOP requires Participation to be successful

    As ESOP Experts we write about participation a lot when it comes to ESOPs. Our whole design and implementation methodology is based around a participative approach, and that’s no coincidence. But what does participation look like? Does it always mean representation on the Board of Directors? Where a goal of the ESOP is an overhaul or integration of the company’s corporate culture, a significant factor could be whether or not employee-owners should have a right to representation on the board of directors. In a unionized company the unions usually require that representation, if they are to look at an ESOP as a means of supplementing wage concessions. Because ESOPs are…

  • Canadian employee ownership

    You have an ESOP; now what?

    Putting in place a new plan, any plan, is always only the first step; it never runs itself. ESOPs are no different. It is not a set it and forget it tool. The ESOP transaction is over and has been well received; now the cultural transformation begins. The initial euphoria provides momentum for the work ahead, but how do you harness it into meaningful actions? Employees may be hesitant and uncertain about how to go about this. It is up to the board of directors and/or the leadership individual(s) to channel this new entrepreneurial energy and focus it on the goals of the corporation. The goal for the ESOP team…

  • employee-owned company,  employees,  Retention

    A Long Time ESOP Company is Becoming 100% Employee Owned

    Back in 2011 EBI watched with interest as EllisDon, a long-time ESOP company, took the recession in stride as one of Canada’s Top 100 Employers for 2012. In The Globe and Mail article, the firm’s vice-president of leadership and entrepreneurial development shared that in the previous year, 84 percent of employees who were offered shares accepted, an increase from the usual rate of around 70% — because they believed in the ESOP and the company. Our president, Perry Phillips, told the Globe and Mail “the employees who are engaged as owners will now do whatever it takes to get that company through tough times. I’ve seen this constantly. A lot of…

  • employee-owned company,  ESOP Benefits,  Retention,  Succession planning,  Talent attraction

    The Case for an ESOP as an Attraction and Retention Tool

    The shut-down of the economy has lasted for almost 2 months and businesses are either facing negative impacts from the COVID-19 crisis, along with most Canadian businesses, or are among the minority of businesses experiencing positive impacts. It’s likely that very difficult business decisions have had to be made to ensure your company’s existence through the crisis. Part of the challenge is having to lay off valued employees, and maintain a positive culture. Although things are still changing rapidly, business owners are likely considering long-term impacts on the company’s ability to retain their employees, but also to attract top talent once the crisis is behind us. The many reasons why owners…

  • Capitalism and Employee Ownership

    Employee Share Ownership Plans & Capitalism

    Louis Kelso is the founding father of the modern ESOP movement. He was a merchant banker who believed deeply in democracy. His fear was that if the economy continued along its current path it would result in 10% of the people owning 90% of the wealth of the country which would destroy the middle class and result in the total demise of democracy. “Kelso long believed that he had not originated a new economic theory but simply discovered a vital fact that the classical economists had somehow overlooked. This fact was the key to understanding why the private property, free market economy was notoriously unstable, pursuing a roller coaster course…

  • employee-owned company

    The Philosophy that allows ESOPs (Employee Share Ownership Plans) to create incredibly successful companies.

    First is the philosophy of personal wealth creation. Employees are motivated by financial gain and ESOPs deliver wealth. Second is the philosophy of cultural engagement on a personal basis. The Theory of Group Wisdom holds that groups are more successful over individuals due not to the intellect of each person but due to the social interaction of the group. ESOPs create the conditions of group success through a participative culture of engagement. The combination of personal wealth creation and social interaction create a synergy that few non-ESOP companies can match. The results are ESOP companies with higher productivity, higher profitability, more innovation, and wealthier employees. By Perry Phillips, President and Founder…

  • Founding Owners,  Management Buyout,  Owners,  Succession planning

    ESOP Owners

    Over 20 years we have had the honour of meeting many business owners who wanted to implement an ESOP for their company.  We have also interviewed thousands of employees of these companies on their desire to become owners. In our opinion there are two types of owners.  The first we call Founding Owners.  These are people who start a business where none existed before.  They have an idea, a passion, and a skill which they believe will be wanted by clients and customers.  Then they risk everything to start the business.  Many go without salary, raising funds from family and friends and putting up their own assets as collateral for…