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Get the Most Out of Your ESOP Effective ESOP Communications September 19, 2012

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. Goal.

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Get the Most Out of Your ESOP Effective ESOP Communications September 19, 2012

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  1. 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.

  2. Goal • Show different approaches to illustrating ESOP account value and its relation to broader retirement planning • Discuss other questions about communicating ESOP value

  3. Caution #1:Intrinsic Motivation Matters Most Research conducted by Daniel Pink, Adam Grant and others: 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) • Autonomy • Mastery • Purpose • Community

  4. 3 Approaches to EstimatingFuture 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?

  5. Caution #2: Making Promises Aboutthe Future is a Bad Idea

  6. 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

  7. 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

  8. Company Specific Tools • Lewis Tree Service • Parametrix • Others?

  9. Praxis Retirement Planning Illustrator • Sample xls worksheet

  10. Praxis Consulting Group To learn more about us: praxisCG.com 215.753.0303 Alex Moss alex@praxisCG.com Linshuang Lu linshuang@praxisCG.com

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