Turn to the centerfold of the most recent Minnesota Business Magazine and you will find Nina Hale, Inc. featured as an awesome and successful Minnesota ESOP company! In 2014, Nina Hale, then-owner and founder of Nina Hale, Inc., decided to sell the company to her employees. Ever since, NHI has celebrated ongoing company growth and continual client success.
What exactly is an ESOP?
As discussed in the article, an Employee Stock Ownership Plan (ESOP) is when a company provides their employees with stock ownership.
To create an ESOP, a company sets up a trust fund for employees and contributes either cash to buy company stock, contributes shares directly to the plan OR has the plan borrow money to buy shares. If the plan borrows money, the company makes contributions to the plan to enable it to repay the loan. Contributions to the plan are tax-deductible, and employees pay no tax on the contributions until they receive the stock when they leave or retire.
When an employee leaves or retires, he or she can sell their stock on the market or sell back to the company.
[source: National Center for Employee Ownership]
Why did NINA Hale decide on an ESOP?
Nina was looking take a step back and exit the company, after learning more about the ESOP model in 2013, she realized it was in alignment with her interests and values. She made the ESOP a priority and spent the rest of the year planning the transition, finally making the ESOP official on January 1, 2014.
“At some point in our growth, the success became less about me and more about the entire team,” Hale says. “I wanted to acknowledge that and reward the team in a significant way — and also ensure the success of the company.”
How does it work at NHI?
After working at least 1,000 hours at NHI, an employee will be granted stock based on a percentage of the salary they made that year — as long as they stick around until the last day of the year. As with all ESOPs, each year the stock is valued and the company receives a stock price. If NHI is sold, the ESOP will be dissolved and the stock will go out to the employees.
To learn more about how NHI’s ESOP works, check out our post from 2013.