BOSTON – The Massachusetts Office of Business Development announced the launch of a statewide hub helping businesses explore and adopt employee ownership models across the state.
The Massachusetts Center for Employee Ownership (MassCEO), which launched Oct. 1, is a resource for businesses interested in employee ownership models to support succession planning, build wealth for workers, advance income equity, and strengthen employee engagement. MassCEO provides information, technical assistance, and referrals to businesses exploring employee stock ownership plans, cooperative business ownership, or Employee Ownership Trusts.
A 19-member Advisory Board on Employee Ownership acts as the executive body of MassCEO. The acting chair of the board, Darnell Adams, is a Boston-based consultant and leadership coach at Firebrand Cooperative. Firebrand, based in Fargo, North Dakota, provides project management, brand identity, and training and facilitation consulting.
“Employee ownership is a powerful tool to help small businesses plan for the future and protect good jobs across Massachusetts,” said Economic Development Secretary Eric Paley. “Through MassCEO, we’re making it easier for business owners to explore their options, connect with experts, and take the steps needed to transition to employee ownership, keeping more jobs and opportunity here in Massachusetts.”
Learn more at the MassCEO website.
Employee Ownership Models
MassCEO defines an Employee Stock Ownership Plan (ESOP) as a retirement plan that enables employees of a business to become owners of stock in that company. In this model, the company establishes a trust to purchase stock from the company. Employees can earn shares in the company based on their salary and years of service.
MassCEO says the model can increase employee engagement and provide tax advantages for both the company and the employee.
ESOPs are suitable for companies with at least 20 employees and with over $5 million in annual revenue.
A worker cooperative (Co-op) is a business owned and self-managed by its employees. Each employee buys a share of the company and becomes an owner with an equal vote in major business decisions, creating a democratic management structure. Equal ownership of the company provides equal profit distribution.
MassCEO says that the co-op model is most often found within companies with five to 50 employees.
An Employee Ownership Trust (EOT) is a trust that holds a controlling portion of the company on behalf of its workers. In this model, the company sells a controlling interest in the company to a trust that holds the employee shares for the benefit of all employees. Employees do not hold shares of the company, but benefit from the ownership of the trust.
According to MassCEO, small to mid-sized companies seeking long-term stability and broad employee benefits find the model suitable.
