On June 12, 2017, Amanda Eisenberg writes on Employee Benefit News (EBN):
Some 175 companies are joining forces in an effort to advance diversity and inclusion in the workplace.
The new CEO-lead alliance, called CEO Action for Diversity & Inclusion commitment, has three goals — to encourage conversations about diversity and inclusion, implement and expand unconscious bias education, and share diversity strategies — to help employers create better workplaces for millions of their employees.
Bloomberg
“We are living in a world of complex divisions and tensions that can have a significant impact on our work environment,” says Tim Ryan, U.S. chairman and senior partner of PwC, who first proposed the idea of the alliance. “ Yet, it’s often the case that when we walk into our workplace — where we spend the majority of our time — we don’t openly address these topics. By sharing best known actions and programs, we are helping to create a more inclusive environment that will encourage all of us to bring our greatest talents, perspectives and experiences to the workplace.”
Company strategies, unconscious bias education modules and other information will be uploaded to CEOAction.com, a website that will serve as a communal hub for companies to catalog effective programs and measurement practices to help with their own diversity and inclusion strategies.
In the fall, signatories from employers such as Anthem, Coca-Cola, Pfizer and Under Armour will come together to assess initial progress, understand fundamental gaps and determine the next phase of this work, according to the coalition.
“As industry leaders, we are seizing the opportunity to help drive meaningful change in the communities we serve,” says Bill Ford, CEO of venture capital firm General Atlantic, one of the companies part of the initiative. “Acting now and having open conversations about diversity and inclusion in the workplace will empower our people to deliver their best work which will undoubtedly lead to greater business.”
https://www.benefitnews.com/news/175-ceos-pledge-to-promote-workplace-diversity-inclusion
Gary Reber Comments:
The question for me is will any of these CEO’s advocate for and pursue making their employees owners of the corporations that employee them? Certainly they should know about the financial mechanism to achieve this without taking any ownership from those who already own. It is the Employee Stock Ownership Plan (ESOP).
Binary economist and corporate tax attorney Louis Kelso was the architect and pioneer of the Employee Stock Ownership Plan (ESOP), which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield — on the promise of the capital investment’s future income.
The ESOP provides access by employees to capital credit to buy company stock and pay for it in pre-tax dollars out of what the assets underneath that stock yield. Bank loans are made to the ESOP trust that represents employees, instead of to the company (current owners). The trust gives the lender a note and with the borrowed monies makes the investment in the company stock. The company then issues stock to the ESOP trust. The company now has the money, which otherwise could have been borrowed directly without the ESOP (benefiting current owners), to make the planned investment and repay the loan from pre-tax forecasted future capital earnings. The company promises the bank to make pre-tax full-dividend payments to the ESOP trust to enable the trust to replay the lender. Assuming that it would take five years for that capital investment to pay for itself, at the end of five years the employees now own the full stock value in the expanded company.
Companies can use the ESOP as the credit mechanism to create employee ownership in ratios up to a 100 percent leverage buyout. Nothing has been taken away from the existing owners. However, using the ESOP, the existing owners will surrender the exclusive right to acquire more ownership in the company and have a smaller percentage of ownership in the total company, but they have not been prevented from making a fair rate of return on their thus-far accumulated ownership shares because the company earns a rate of return throughout the process. After the loan has been paid off with pre-tax earnings, the employees will have more earnings from capital and they will have more consumer power to purchase products and services. Multiply this by tens of thousands of employee-owned companies and the economy revs up to grow dramatically.
There are now over 11,000 profitable ESOP companies, of which 1,500 of those companies are worker majority owned, with workers paying for their stock shares out of future corporate profits, not by reducing their take-home labor worker incomes.
ESOPs work as designed and optimized when the workers receive the full property rights as owners, including full voting rights, not simply treated as beneficial owners with power concentrated at the top of the company, without any accountability or transparency. Unfortunately, some ESOPs have been structured so that the rights, powers, and benefits of ownership remain concentrated in a small non-accountable elite controlling corporate and financial governance. When all of the employees are owners, dependent on their income from the company’s bottom line rather than through ordinary labor wages and benefits, the workers’ economic interests are more invested to see that their company succeeds. In this way, each person in the company is empowered as a labor worker and as a capital worker (owner) and inspired to work together as a team to make better operational decisions to serve and maximize value to their customers.
Under our current financial system, the security (collateral) necessary to secure an ESOP loan must come from the company, and therein the current owners are providing the security to broaden employee capital ownership with the benefit that expanded capital ownership drives expanded consumer power to purchase products and services. (This is somewhat akin to Henry Ford’s policy to pay workers sufficient wages to enable them to purchase the automobiles they manufacture.)
Under this scenario the company owners are “insuring” the risk without a benefit, which can be re-compensated by paying the employees less labor wages, reduced pension benefits, and receiving government tax forgiveness benefits, which are written into the Internal Revenue Code.
With the ESOP, employees can acquire capital ownership with the earnings of capital. ESOPs have thus far only provided part of the solution, and the stock acquisition is limited to the employer company and to those employed by a for-profit business corporation.
Robert Ashford, Professor of Law at the Syracuse University College of Law (New York) and a former lawyer in Kelso’s San Francisco law firm, specializes in the teaching of binary economics. He has expanded the ESOP trust into what he terms the “Super ESOP,” which includes multiple company diversification facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). Under Ashford’s plan, the promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the ESOP trust is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust enough money to enable the trust to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be invested in ownership broadening ESOP trusts to create new capitalists. Thus, national capital credit insurance replaces the requirement for the current corporate owners to pledge security.
ESOPs and other Kelsonian plans avoid the gambling trade and Wall Street firms that play with your money. The ESOP circumvents that. According to Kelso: “In a single transaction, you finance tools for the employer and ownership for the employees. The pre-tax yield of corporate assets of prosperous companies varies from 25 to 60 percent. The yield on secondhand securities is around five or six percent. Sure, with capital gains, you can get a little more, but don’t forget, that’s a zero-sum game; for every gainer, there’s a loser. Wall Street doesn’t fly any airplanes or raise any corn or do anything else in the way of producing products and services. It just plays games with your dough. And when you take it out in pensions, you’re going to get less than the company put in for you. You have to; that’s the dynamics of it.”
