How ESOP Can Benefit You

By Leslie Sheets


As an employee of Kenneth's, you gain the advantage of employee ownership through our Employee Stock Ownership Plan (ESOP). Now, you may be wondering, what is an ESOP? An ESOP is a defined contribution plan that provides our employees with an ownership interest in the company at no cost to them! While ESOP’s are relatively common in other industries, the structure is practically unheard of for salons, which typically have a single owner or a small number of partners. Now, curiously, you may wonder how we got to this place as a company? Well, for 30 years while growing to 9 locations, founder, Kenneth Anders, was a more traditional salon owner. As he began to look ahead to retirement, he started contemplating what would come next for the business he loved and its more than 300 employees. When an ESOP is formed, every employee has a stake in the business. There is a board of directors and other legal considerations of a corporation, and there’s a leadership team as in any salon, but everyone on staff is a part owner. Here is how being employed at Kenneth's and being an Employee Owner can potentially benefit you!

Earn More Than Your Counterparts

Employees of an ESOP have income on average 5-12% more than non-ESOP companies. At Kenneth’s, a new employee is fully vested after three years. This is automatic; the employee does not invest money or take any action to become a fully vested stock owner.

More for Retirement

Did you know nearly 1 in 5 women have nearly nothing saved for retirement? Women often place other saving and spending needs of their family ahead of their own retirement, which leaves them ill-prepared for this next chapter in life. ESOP employees have retirement accounts that are 2.2 times greater than at comparable non-ESOP companies. You gain a financial benefit for retirement without any personal contribution! The company is obligated to repurchase shares from ESOP participants when they retire or after a five-year waiting period for employees who leave the salon before reaching retirement age. There’s a good chance you could live 20, 30 or more years in retirement, so it’s important to establish long-term goals and a financial plan that covers your whole life in retirement. Effective planning is the best first step and can help improve your chances of retiring comfortably later.

Company Stability

Did you know ESOP companies are more secure? Yes! It’s true! Companies with an ESOP program are 25% more likely to stay in business AND workers are 4 times less likely to be laid off during recessions than employees working for a non-ESOP company. ESOP companies also have an 8.8% higher sales average than non-ESOP companies. Stability does not necessarily mean that you will stop all the possible improvements you can make for your business. It simply means that you are in a situation where you focus on consistency because it provides you excellent profit.

Teamwork Culture

There is a sense of pride when every employee is an owner. Teamwork, success and ownership is ever-present when we are all owners. Kenneth's employees are motivated by the company's continued success knowing they have a vested interest in its success. This cultivates a culture of ownership and pride!


Q: What is Vesting and how do I become Vested in my account?

A: In a retirement plan, "vesting" means ownership. Each eligible employee will vest, or own, a certain percentage of their account in the plan each year. An employee who is 100% vested in his or her account balance owns 100% of it. You become vested at 100% after 3 years of fully eligible employment.

Q: How does money go to an ESOP account?

A: The company's contribution is divided up among all eligible participants based on an equation that takes into account your compensation to the total compensation of all participants.

Q: How can more money be added to the ESOP?

A: The more profitable the company is, the higher the stock price. The more you earn, the more you receive by allocation using the equation above. The longer you stay with the company, the more shares you will accumulate that in turn increases your ESOP balance.

Q: What benefits will I receive at retirement?

A: You will be entitled to all your accounts under the plan when you reach retirement age.

Q: What happens if I leave before I retire?

A: We never want you to leave, but if you must, you can elect to have your vested benefit amount distributed to you 60 months following your departure during our annual distribution period.

Q: What are the tax implications when I receive a distribution?

A: Generally, any Plan distribution is taxed in the year you receive the distribution. Your personal tax rate will vary. You can reduce or defer the amount owed for taxes by rolling over into an IRA. You should consult with a financial advisor to advise on all implications before making any decisions.

At Kenneth's, the key to success is believing in our employees. We are passionate about cultivating a positive work environment and committed to elevating our industry by empowering beauty professionals to make a living beyond expectations. Our Professionals are caring and committed to excellence. If you are looking for a part-time position,a full-time career, or just wanting to learn more about our ESOP program we would love to talk with you!