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Published May 2008

American Systems Employees Earn a Piece of the Pie

Teresa “TJ” Baskerville

In today's crowded marketplace, everyone's trying to get a piece of the pie. At American Systems, employees can earn it, not only for the company but for themselves. The majority-owned employee stock ownership plan (ESOP) company has turned a nontraditional employee benefit into a far-reaching value chain that significantly contributes to the organization's bottom line and also enables employees to own a stake in the fruits of their labor.

Meeting and Exceeding Expectations

An employee stock ownership plan is a retirement plan that establishes a trust fund to invest primarily in the company's stock on the employees' behalf. For employees, an ESOP translates to a supplemental compensation fund into which annual contributions are allocated so employees may share in the value their work generates.

Allocation and vested amounts depend on a variety of factors, including overall employee compensation, total years of service at the company or a combination of the two. The investment becomes owned by employees when they are deemed partially or fully vested. The employer's contributions to an ESOP on behalf of employees grow tax free until an employee's retirement, death or disability. The financial rewards associated with ESOPs can be particularly impressive for long-term employees, who start to see the fiscal benefits of the ESOP in a new light when their accounts grow over several years to levels beyond their initial expectations.

With approximately 1,500 employees, American Systems, a government and commercial technology solutions provider, is one of the top 100 majority-owned ESOP companies in the United States, out of about 11,000. American Systems employees number among the nearly 10 percent of the U.S. workforce employed by an ESOP.

The premise on which American Systems based its decision to become a majority-owned ESOP company in 1990 was a simple one: employee-owners, as true stakeholders, would perform better, serve as the company's most effective brand ambassadors and produce better results for the company, customers and themselves. What began as a philosophical experiment became a versatile company with an available, committed and self-managed professional staff that consistently delivers more than is expected and tangibly contributes to its customers' success.

Win-Win for Employers and Employees

For American Systems employees, the ESOP serves as an additional source of retirement income — not necessarily a primary source, as may be the case with a traditional retirement savings plan, such as a 401(k). Rather, with the ESOP, employees take an active role in boosting their retirement savings by helping their company achieve its business and revenue goals. In this way, when the company does well, it can share its success with employees through ESOP allocations and value growth.

For employers such as American Systems, the advantages of an ESOP are obvious. Employees are on the frontlines with customers and are closest to the day-to-day processes that keep the company moving forward. With a vested interest in the company's success, employees are motivated, empowered and entrusted to put their best foot forward each day. Ultimately, this has translated to improved performance and dedication to customers and has enhanced recruitment and retention efforts.