ESOP Education Series

Let’s review some details so that you understand what you are looking at in your statements.

FYI:  New Employees to MCI as of 2023- You will not receive a login until the statement next year when you are eligible to participate in the ESOP.

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Set your expectations

Don’t get dollar signs in your eyes! We’ve said it before, and we will say it again; this is not a get-rich-quick scheme.  Our stock valuation can fluctuate, and it will be generally low for the first few years.

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WHY will the value be low? 

To become an employee-owned company, the company had to first be sold to the ESOP Trust by the original private owners of the company.   The sale will be paid to the owners over time, and that money comes from the annual contributions to the ESOP Trust until that debt is paid off.

Think of it like buying a house; you take a loan out to BUY your house from the bank.  The bank holds the deed to your house, and you pay off the loan monthly over the length of your designated mortgage terms (typically 30 years for a mortgage, but don’t worry the private loan to the sellers isn’t even close to that amount of time). Once you pay off the loan, the bank gives you the deed, and your house is officially yours at its full market value.

In our ESOP—there is no bank.  The private sellers have individual private loans based on a fair market sale, and they are assuming all the associated risks. We pay off the loans, (and the company remains profitable), our equity in the company goes up, and our share value will reflect that.

What will the Statement look like?

This statement is going to be personalized for YOU; your vesting percentage, your number of shares, and the value of that they are worth for year ending 2023. 

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1. Your information - Near the top, you’ll see your personal information, including your years of vested service, your participation status, and the date your participation started.

2. Last year’s balance - What is in your account as of the end of the last plan year.

3. Forfeitures - There is a new line item on your statement for the 2023 year called “Forfeitures.”  These are any shares that were given up, or “unvested” by employees who left the ESOP in 2023.  The shares that they left behind go back into the trust and are reallocated to all current participants.

4. Total account balance - This represents the total number of shares associated with your account.

5. Current market value - The per-share value of the company stock as of the end of the plan year, as determined by an independent appraiser (valuation firm).

6. Total account value - What your account is worth at the end of the plan year.

7. Vested percentage - This is the vesting percentage that you have earned based on your years of service and the vesting schedule as defined by the plan.

8. Vested account value - This is the current vested value of your account, based on your vested percentage. This is the amount that will be paid upon a distribution event.