Transcript Document

Get the Most
Out of Your ESOP
Effective ESOP Communications
September 19, 2012
ESOPs & Retirement:
Communicating Account Value
Alexander P. Moss, Principal
Praxis Consulting Group, Inc.
ESOPs & Retirement: Communicating Account Value | Praxis Consulting
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Goal
• Show different approaches to illustrating
ESOP account value and its relation to
broader retirement planning
• Discuss other questions about communicating
ESOP value
ESOPs & Retirement: Communicating Account Value | Praxis Consulting
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Caution #1:
Intrinsic Motivation Matters Most
Research conducted by
Daniel Pink, Adam Grant
and others:
•
Autonomy
•
Mastery
•
Purpose
•
Community
Good summary available in “Drive” by Daniel Pink and in
his talk for an RSA Animate Video (Search on YouTube for
“RSA Animate Drive Daniel Pink)
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3 Approaches to Estimating
Future Account Value
• Lite (tastes great, less filling): Back of the
envelope
• Intense
– Utilize dedicated repurchase obligation model
– Company-specific model – usually Excel
• Medium
– Praxis generic ESOP & Retirement Planning Tool
– Other tools you use?
ESOPs & Retirement: Communicating Account Value | Praxis Consulting
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Caution #2: Making Promises About
the Future is a Bad Idea
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Back of the Envelope
• Start with current balance
• Eyeball how much account will grow due to
future allocations
– This what we (company) are giving you (participant)
– How much do you *want* it to become?
• Guesstimate future account value ranges at
different compound growth rates
–
–
–
–
5%: double in 15 years
7%: double in 10 years
10%: double in 7 years
15%: double in 5 years
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Formal Repurchase Obligation Tools
• Tools
– Telescope: ESOP Economics
– PERLS: Principal Financial
– Others?
• Approaches
– Forecast value for all
– Individuals sit with finance personnel to run
scenarios, e.g. Padilla Speer Beardsley
– CFP on retainer
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Company Specific Tools
• Lewis Tree Service
• Parametrix
• Others?
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Praxis Retirement Planning Illustrator
• Sample xls worksheet
ESOPs & Retirement: Communicating Account Value | Praxis Consulting
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Praxis Consulting Group
To learn more about us:
praxisCG.com
215.753.0303
Alex Moss
[email protected]
Linshuang Lu
[email protected]
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