Obama Says Employee Ownership Should Be Encouraged

On September 28, NCEO board member Tom Roback had the opportunity to meet President Obama at one of his conversations with small groups of local people around the country. As it turned out, one of these was at Tom's sister's house in Richmond, Virginia. Tom asked the president about ESOPs. The transcript follows. A video can be found at this link.

Tom Roback: Thanks, Mr. President. I manage a small business. We serve ESOP companies—hundreds of ESOP companies. And I've just found it extraordinary in visiting many of these ESOP companies with the culture that they've developed, and the productivity and competitiveness, and it's a good model for keeping jobs here in the U.S.

President Obama: You want to just explain to everybody what ESOPs are? These are employee-owned businesses. I just want to make sure everybody understands.

Tom Roback: Exactly, exactly. And I wanted to just—the ESOP laws that have been in place for over 35 years have allowed employee owners to share a piece of the action of the business while not having to dig in their own pockets for that, so it's helped them get to retirement, which is tough these days long term.

My main question is just, with your good initiatives you're for focusing on small business in the new act, will you consider encouraging or expanding the law to help more small privately held companies look to the ESOP model? Thank you.

President Obama: I would absolutely be interested in taking a look at it. The idea behind these ESOPs is that if employees have a piece of the action, they're essentially shareholders in these companies, then you are aligning the interests of workers with the interests of the company as a whole.

Now, what that means is, is that when a company has a tough time, workers have to take a hit because they're owners, essentially. On the other hand, when things are going well, they're getting a share of the profits. And so theoretically, at least, it's something that can help grow companies, because the workers feel like they're working for themselves, and they're putting more of themselves into their job each and every day.

I think that it's something that can be encouraged. I have not seen specific proposals that are out there legislatively, but I'm sure you can share them with me.

Tom Roback: Yes, there actually has been a lot of strong research recently.

President Obama: Good. So I'll be interested in taking a look at that stuff.