Employee Stock Ownership Plan (ESOP)

Vesting is based on completed years of service. Employees become 100% vested after five years of service, 60% vested 4-5 years of service, 40% vested 3-4 years of service and 20% vested 2-3 years of service.

To earn vesting credit you must work at least 1,000 hours in a plan year.

If you leave before becoming fully vested, you could experience a forfeiture of any unvested shares. Forfeited amounts are reallocated to active ESOP participants.

The ESOP Trustee’s have sole responsibility for setting the stock value each year.

The Trustees engage Chartwell Financial Advisory, Inc. based in Minneapolis, MN, to perform an annual fair market valuation of Oftedal’s stock.

Federal law (ERISA & Department of Labor) requires Oftedal to conduct this annual independent, third party valuation.

Chartwell reviews audited financials and performs an in-depth valuation of the company. Chartwell reviews such items as management structure, asset value including: equipment and property, comparable market valuations, work backlog, budget projections, debt load, etc. before determining a fair market stock value.

Using the Trustee’s share price, Principal Financial Group (Principal), Oftedal’s ESOP third-party administrator, calculates each eligible ESOP participant’s allocation and prepares individual account statements.

A Contribution is the amount of cash the Board of Directors decides to pay into the plan each year.

A Contribution can be in stock, cash or both. The Contribution is largely based on the repurchase obligation. The repurchase obligation is the company’s commitment to buy back shares from ESOP participants eligible to sell back their vested shares to the company.

Contributions are funded entirely by the company. Active participants pay nothing to accumulate Oftedal stock.

An allocation is the earned portion of the overall contribution that eligible, active ESOP participants receive.

To receive an allocation you must work 1,000 hours during the plan year (January 1 – December 31) and be an active ESOP employee on September 30

Your annual allocation is based on your gross eligible earnings as a percentage of the total eligible payroll for the plan year. This calculated percentage is then multiplied by the contribution amount, which largely determines your annual ESOP allocation.

Principal administers annual ESOP allocations & statements.

Diversification is electing to take a qualified portion of your ESOP account and receive a distribution by rolling the amount into retirement plans such as an IRA or 401(k) or electing to take cash.

Diversification applies to ESOP participants who have been in the plan for 10 years AND have turned age 55.

The diversification period lasts six years from the time an eligible ESOP participant turns 55.

During the first year of diversification, eligible ESOP participants can diversify up to 25% of their vested shares. In the sixth and final year, participants can diversify up to 50% of their vested shares, minus any previously diversified shares.

A distribution is receiving some of the value of your ESOP account. ESOP participants become eligible for a distribution based on age, life events, or employment status. Eligibility events include:

• Age: Normal retirement age, 65; Diversification age, 55
• Life events: Death or disability
• Employment status: Voluntary or involuntary termination

Retirement at age 65:

Participants who attain age 65 AND are no longer employed by the Company may elect to commence ESOP distributions. Distributions for participants reaching normal retirement age shall begin no earlier than the plan year following the plan year in which the participant turns age 65.

Termination of employment:

If you leave the company before age 65 (voluntarily or involuntarily), you must wait five plan years before becoming eligible for your first distribution. If you reach age 65 during this waiting period, your first distribution will occur during the next plan year.

Death or disability:

In the event of death distributions are paid to your designated beneficiary. Timing of the distribution is subject to any previous distributions. Same applies to disability distributions, except distributions are received by the participant.

Distribution schedule:

Except in cases of death or disability, distributions are paid over five years in 20% annual increments of your total vested account balance.

Distribution options:

Upon becoming eligible for a distribution, a participant may roll over the eligible portion of the ESOP distribution to a 401(k) plan or an IRA, or may elect to receive the distribution in cash. Cash distributions made prior to attainment of age 59½ are subject to applicable income taxes and early withdrawal penalties

Diversification is taking a qualified portion of your account and investing in other retirement vehicles (IRA, 401 (k)) etc.

Diversification applies to participants who have been in plan for 10 years & are at least 55 years old.

Diversification period lasts six years from the time an eligible ESOP participant turns 55.

Participant’s have a six year window to diversify their eligible ESOP shares. During the first year of diversification, eligible ESOP participants can diversify up to 25% of their vested shares. In the sixth and final year, ESOP participants may request a distribution of up to 50% of the company stock allocated to their account.

Vesting is based on years of service. Employees become 100% vested after five years of service, 60% vested with 4-5 yrs of service, 40% vested with 3-4 yrs 0f service and 20% vested 2-3 yrs of service.

If you leave before becoming fully vested, you could experience a forfeiture of any unvested shares. Forfeited amounts are reallocated to active ESOP participants.

To earn vesting credit you must worked at least 1,000 hours in a plan year.

100% Employee-Owned and Operated

Once a family-owned business, E.H. Oftedal & Sons, Inc., co-owned by Bill and Jim Oftedal, transitioned to an Employee Stock Ownership Plan (ESOP) in 2002 and by 2009 Oftedal Construction, Inc. was 100% employee-owned. The transition to employee ownership allowed the management team to stay in place while rewarding employees who had helped to establish the company’s strong reputation.

Every Oftedal employee has the opportunity to own company stock and become an employee-owner through this IRS-approved benefit plan. We educate employees on this unique culture, business model, and benefit which is provided at no out-of-pocket cost to the employee and complements other retirement benefits, such as a 401(k) IRA, offered by the company.

As employee-owners, each and every member of the Oftedal team has a financial stake in the company’s success and can watch their interests grow along with the company’s. This business model empowers the team to think and act like business owners and encourages them to build a lifelong career at Oftedal.

Employee ownership helps cultivate and sustain an inclusive company culture in which each team member is valued equally.