DAY'S JEWELERS ESOP FREQUENTLY ASKED QUESTIONS
WHY DID KATHY AND JEFF CHOOSE TO SELL TO ESOP RATHER THAN TO A THIRD PARTY? When a company is sold to a third party, often times the new owner will make changes to the company and its culture. It was important to Kathy and Jeff that the company's future remain in the hands of the employees.
WHY ARE ESOP'S INCOME TAX EXEMPT? ESOPs are basically a retirement plan for employees. The government highly encourages citizens to save money for retirement so they do not become dependent on the government after retirement.
WHAT DO I HAVE TO DO TO PARTICIPATE IN DAY'S ESOP? All Day's employees are eligible to participate in the ESOP and will automatically be enrolled.
WILL MONEY BE TAKEN OUT OF MY PAYCHECK IF I PARTICIPATE IN THE ESOP? No, employees pay nothing to participate.
HOW WAS THE VALUE OF THE COMPANY DETERMINED? The company hired a Trustee in early 2021 to represent the employees in the ESOP creation process. The Trustee hired an independent business appraiser approved by the US Department of Labor.
WHEN WILL MONEY BE IN MY ESOP ACCOUNT? To qualify for distribution, an employee must be vested. To be vested, an employee must work a minimum of 1,000 per year for 3 plan years. The first place year is 2021. If an employee has worked 1,000 hours in 2021, he/she will have accumulated one vested year.
WHEN CAN I TAKE THE MONEY OUT OF MY ESOP ACCOUNT? When you leave Day's, the money in your account will be paid to you in cash. On amounts over $5,000, the company reserves the right to pay off the employee over a 5 year period.
WHERE DID THE COMPANY GET THE MONEY TO PAY JEFF AND KATHY? The company borrowed money from a bank to make a down payment in the amount of about 20% to Kathy and Jeff. The rest of the money will be paid to them over 10 years, or sooner if the company is able to.
HOW MUCH MONEY CAN I EXPECT WILL BE DEPOSITED TO MY ESOP ACCOUNT? Each year, Day's ESOP Trustee will commission a new valuation. Any appreciated value of the company is eligible for allocation to each participant's account. The amount will be small at first, but will grow much more rapidly as company debt is paid down.
WILL I BE ABLE TO SEE HOW MUCH MONEY IS IN MY ESOP ACCOUNT? Yes. After the valuation each year is complete, allocations will be made to individual participant accounts. A portal will be established so each employee will be able to see account balances. The ESOP account balance will only change once per year.
WILL I BE ABLE TP CONTINUE PARTICIPATING IN DAY'S 401K PLAN? Yes. Day's 401k plan will remain exactly as it was before. The company will continue to contribute to employee 401k accounts.
WILL JEFF AND KATHY OWN STOCK IN THE COMPANY? No. Jeff and Kathy will own no stock. However, they will be entitled to have 27% of the company's appreciated value deposited into their retirement plan until the company has paid them off.
WHAT CAN I DO TO MAKE MY ESOP ACCOUNT BALANCE GROW FASTER? Do your job to the best of your ability. The more profitable the company, the more money that will be allocated to employee accounts. Look for ways to increase safes, reduce expenses and to deliver outstanding customer services. Submit any ideas you might have to the suggestion box.
Still have questions? Submit your question via the ESOP Question box located on the ESOP Portal or Blue Box.