Employee Stock Ownership Program

An annual valuation of the company determines what your ESOP shares are worth.

Federal law (IRS & Department of Labor) require Oftedal to have an independent, third party value the stock annually.

Oftedal’s valuation company is Chartwell Capital Solutions based in Minneapolis, MN.

Chartwell reviews audited financials and performs an indepth valuation of the company as a going concern. Chartwell reviews such items as management structure, equipment and property, market valuations, future work load, budget projections, debt load, etc before determining a fair market stock value. Typically this is complete by the first of May.

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

Principal Financial Group, our ESOP third party administrator, utilizes information obtained from the valuation to complete the allocation process.

A Contributionis 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.

A Contribution is based, in part,on annual company profits. Better company does, greater the annual contribution can be.

Contributions are funded entirely by the company. IT COSTS THE EMPLOYEE NOTHING!!!!

Allocation is the process of dividing the contribution to all eligible ESOP participants.

Yearly allocation is based on your gross earnings as a % of total eligible payroll for that plan year. Your % of total eligible payroll multiplied by the contribution amount equals your yearly allocation.

To receive an allocation you must work 1,000 hrs during plan year and be an active ESOP participant/employee on September 30.

Principal, our third-party ESOP administrator , oversees annual ESOP allocations.

A distribution is receiving a portion of the value of your ESOP account.

A distribution occurs if you retire at age 65 or leave the company for some other reason (quit, death, disability).

When you turn age 65  you become eligible for your first distributionin approximately 1 year

If you quit you must wait at least 5 years, before you are eligible for your first distribution, unless you turn 65.

With the possible exception of death or disability, distributions take place over a period of five years in 20% increments of your total account value.

In case of death, your beneficiary will receive the amount of any unpaid account balance.

If you become disabled you will receive a distribution within one year.

When you become eligible for a distribution, you’ll have the option to rollover your eligible ESOPcash in to an approved IRS Plan(401 (k), IRA) or you may elect to take cash. If you are less than age 59 ½ significant taxes and penalties apply if you elect cash.

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 participant turns 55.

Participant’ shave a five year window to diversify 25% of their total shares after they turn 55

Participant’s can elect to diversify 50 % of their total shares, minus the number of shares previously diversified, in the sixth year.

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

If you leave before becoming fully vested, you’ll experience a forfeiture.

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

Forfeited amounts are reallocated to people who stay with the company.

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.