At an age where retirement is no longer an abstract idea, Katz says he has gained valuable insight into the various ambitions and concerns that stand at the heart of the way people think about retirement and retirement investments. He fits squarely in the camp of people that have reached the traditional retirement age and have no intention of hanging it up, regardless of his career success to this point.
“Like many people in my generation, I have enjoyed my share of business success, and I am proud of that. I have enjoyed what I do and I still enjoy serving clients and having a role to play in business,” Katz explains.
He offers up the background less for the sake of autobiography and more as a way to begin to discuss the virtues of employee stock ownership plans (ESOPs)—and when they are an option that should be seriously considered by an employer.
“In my experience the folks that make the best candidates for establishing ESOPs are people who are really facing a decision about what to do with, essentially, their life’s work,” Katz says. “In that respect ESOPs generally are thought of in terms of business succession planning, and they are most effective when there is a paternalism about the company, the employees and the legacy that is guiding the decisions that are being made.”
In this sense one can compare ESOPs against managed buyouts or other structures that turn to an independent third party to monetize a closely held business, which are more designed to wring every last dollar possible out of the business at the point of the transition of ownership. This is simply not what ESOPs are about, Katz warns.
“In most cases, the dollar amount is not going to be the primary motivating factor for creating an ESOP,” he says. “It has to be about caring about the employees and the legacy of the company. ESOP is a very powerful structure and one that I advocate more often than not, but I would say that it’s only about half of businesses that come to us where this is truly a good fit for what the ownership is trying to accomplish.”