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Issue link: http://sdi.epubxp.com/i/738825
32 Security Dealer & Integrator / www.SecurityInfoWatch.com October 2016 provided a compelling story for our customers," Mach says. "e employ- ee-owners of Pro-Tec Design have been given a unique opportunity to continue improving the Pro-Tec expe- rience for all our stakeholders and contributing to their own success." Employees of an ESOP company are known as beneficiary stockholders. As such, the stock is held by a trust which is governed by the fiduciary and is not held, traded, bought or voted on by the employees. Each ESOP participant gets a yearly statement detailing how much stock is in their name and the current value of that stock. "e ultimate goal of any ESOP is eventually full owner- ship of the company by the (employ- ees)," Hoertsch says. Management of the company still follows a traditional management sce- nario, with the exception that an ESOP must have a fiduciary, which can be an individual or group of individuals, who appoints the board of directors. In addition, an annual appraisal of the company's worth is required for stock valuation. Clark recommends management explore the difference between a C Corp and S Corp ESOP. Tech Systems, for example, is an S Corp. LVC's ESOP offered the owner a cal- culated exit strategy and has provided LVC a disciplined and profitable retire- ment plan for the employees. at said, it is not a cheap path to follow. ESOPs are complicated and highly regulated. Legal advice is man- datory and expensive. "We used outside parties to handle the evaluation, legal documentation and the Trustee function, and we still do," Clark says. While acknowledging that it is expensive, Clark says ESOPs are well worth the initial cost. "A small com- pany considering an ESOP should budget a minimum of $100,000," Clark says, noting that larger companies can expect that number to be two or three times that. Tech Systems owner Darryl Keeler wanted to find a way to eventually retire and transfer ownership to the employees while leaving the company, its clients and employees intact. Find an ESOP company that is in a similar business and talk to them. ESOP companies love to help each other and people considering an ESOP." — Jerry Clark of Tech Systems Tech Systems' leadership team includes: (bottom row) Melissa Oliver, Darryl Keeler, Ellie Long, Joanne Heroux (top row) Wayne Smith, Andy Chambers, Larry Simmons and Ron Luchene. Cover Story Getting the ESOP off the Ground "e cost to set up an ESOP can be daunting, but the cost can be reduced substantially if the company looking at doing an ESOP takes advantage of the information and organizations that offer good advice and knowledge on how to approach them," Hoertsch says. When Pro-Tec first communicated its intention of setting up an ESOP during an all-employee meeting, the idea was well received, Mach says, add- ing there had been concerns up and down the line as to what would hap- pen to the company and the workers once owner Tom Hagen retired. "is provided us with a path for- ward, ended worries among employ- ees and potential new hires, and also