PLATTSBURGH — The State of New York Public Service Commission has approved Champlain Telephone Company's Employee Stock Ownership Plan.
Champlain Telephone President and CEO Trent Trahan said the approval, issued Aug. 23, is conditional.
"We have 30 days to decide if we like or dislike it."
WORTH MILLIONS
Champlain Telephone filed a request in July 2009 to form an employee stock ownership plan for its non-union employees. The plan calls for company employees to acquire Trahan's 50.07-percent controlling interest.
A preliminary valuation of Trahan's 37,480 shares of common stock by Empire Valuation Consultants and ESOP Economics arrived at an estimated value of $4.225 million, although that figure could be higher or lower when the deal is actually finalized.
TAKING OVER LOAN
Trahan said $1,334,190 of that compensation is the company's acquisition of responsibility for the personal loan he took out with the Rural Telephone Finance Cooperative when he acquired the company in 2000.
The company will also issue him a promissory note of $2,890,810, by which it will make quarterly payments to Trahan during the next 10 years at 5-percent interest.
LOCAL OWNERSHIP
The goal was to keep the company locally owned, he said. It's about trying to do the right thing for the company's employees and the community. They are jobs that pay well, and the employees spend their money in this area, Trahan noted.
"I could have got a lot more money on the open market than I will get by selling to my employees. If I sold five years ago, I probably would have got twice what I'm going to get."
SERVICE PRAISED
The Public Service Commission put in some conditions under which it would grant approval. Some addressed service quality issues.
The commission noted it has commended the company for excellent service for 18 of the previous 22 years. That includes the last 11 years.
The commission's filing states that other risks include that the executive-compensation expense borne by ratepayers could be too high and that the new pension expenses could be too high.
"There's no question they looked out for the interests of the ratepayers. That's part of their charge," Trahan said.
The commission noted that the company's employees have agreed to participate in the plan.
"That these parties, who presumably know the company and its operations better than anyone else, are in favor of the ESOP provides some degree of comfort," the commission said.
TRUSTEES
The plan calls for three employees to be appointed by Champlain Telephone's Board of Directors as trustees of the plan. Those trustees will represent the members on day-to-day business matters.
The plan members will be able to vote only on major issues, such as merger offers, recapitalization, liquidation, dissolution or sale of substantially all assets.
RETIREMENT PLANS
ESOP Economics is doing financial projections of what the company will need to do to be able to pay Trahan and enable employees to get their retirement packages.
Benefit Concept Systems is providing consulting services. If the plan is finalized, non-union employees end their participation in the National Telephone Cooperative Association's group pension program.
The plan calls for employees to get shares of the company based on the number of years they have been employed. When they retire, they get reimbursed for the value of the shares they earned during their career.
GROWTH POTENTIAL
Trahan said the PrimeLink side of the company is certified to provide long-distance telephone and Internet service to the entire 518 and 315 area codes. That leaves it a lot of room for future growth.
It continues to grow by leaps and bounds, he said, and is projected to continue to do so.
"That's why I think there's a huge upside for the employees and what they will get in their retirement packages."
Trahan said Empire Valuation will evaluate the company's performance on an annual basis. That will enable the employees to track the value of their retirement packages.
Because the employees' retirement benefits will be tied to the company's success, they have an investment to make it more successful.
"We've seen it already where they've stepped it up," Trahan said.
SERVICE AREA
Champlain Telephone provides local telephone service in the Rouses Point, Champlain, Mooers, Altona and Mooers Forks areas.
It has 53 employees, which includes 13 union employees who are not part of the plan. They will continue to participate in the group pension program.
Trahan said he will stay on for six years. That includes two years to enable him to retire at 65 and four years as a consultant to help management move toward the vision he's been working toward the last 15 years.
E-mail Dan Heath at:
dheath@pressrepublican.com
CEO Salaries Become Sore Issue in Labor Disputes
Facebook Sued by Investors Over Disclosures
HP to Cut 27,000 Jobs, Save Up to $3.5B
Investors Slap Facebook 11 Percent Lower
Yahoo to Reap $7.1B From Alibaba Stake
Facebook Shares Close Up Just .23 at $38.23
Future Uncertain for Post-IPO Facebook
Facebook Shares Spike 10% Higher at Open
Mark Zuckerberg Rings Nasdaq Opening Bell
Verizon to End Unlimited Data Plans
Facebook IPO: What You Need to Know
GM Says It Will Stop Paying for Ads on Facebook
On Zuckerberg's Mind: People, Not Shareholders
Dimon Survives Votes on Pay, Chairmanship
Raw Video: Protesters Target JP Morgan Meeting
Poll: Half of Americans Call Facebook a Fad
Could JP Morgan Losses Have Been Prevented?
Fuzzy Resumes: A Look at Leaders Undone
More Questions After Yahoo Leadership Fiasco
Ground Broken for New Whole Foods in Detroit
