Employee ownership is a business operation in which employees own a significant percentage of company stock. There are more than 10,000 such companies nationally, employing over 10 million workers. Michigan has more than 300 employee-owned corporations.

Most employee-owned companies are established under an Employee Stock Ownership Plan (ESOP). ESOPs are a special type of tax-qualified benefit plan designed to invest in the stock of the sponsoring employer. Employees become beneficial owners of company stock when the employer establishes an ESOP.

Employee Ownership Can Make Companies Stronger
No one is more concerned about a company than its owners. When employees become part owners through an ESOP, the company may benefit through increased productivity, profitability, and improved labor management relations. This is especially true when the ESOP is combined with substantial opportunities for employee involvement in shop-floor problem solving and participation in decision making.

ESOPs provide attractive tax benefits, which can be used for a variety of corporate purposes:

• Providing a market for retiring business owners
• Raising low-cost capital
• Financing a corporate divestiture
• Providing a low-cost employee benefit plan
• Providing an alternative to business or plant closing

Eligibility
Businesses with 25 or more employees and a payroll of $500,000 or more are the most likely candidates for an Employee Stock Ownership Plan. However, smaller firms may also be appropriate for employee ownership.

Services
Services are available to any company, individual, or organization interested in employee ownership. Services include:

• General consultation and information on employee ownership program options, including ESOPs and financing
• Referral to qualified specialists who can assist companies in designing and implementing an ESOP
• Identification of financing options and sources for employee ownership projects
• Referral to other technical assistance and training programs available through the Michigan Department of Career Development and other resources

For more information, contact:
Michigan Department of Career Development
Office of Workforce Development, Workforce Transition Unit
201 N. Washington Square, 5th Floor, Victor Office Building
Lansing, Michigan 48913
Telephone: (517) 373-6234
Fax: (517) 373-4648
TTY: 1-888-605-6722