Disclaimer: These communications are intended for the employees of HB Global. We recognize that the general public will have access. The views expressed in these communications represent Bob Whalen in the context of HB Global and may not apply to broader audiences.
In today’s world, longevity is becoming a concept of the distant past. News and information are consumed in small bites, our phones allow us to access new information and opportunities at the click of a button, and technology makes the latest gadgets and software outdated in the blink of an eye.
However, longevity is a concept that is central to our HB Global mission and values. When employee owners stay for an extended period of time at our company, there is a two-fold benefit.
First, there is a benefit to the work we produce. Our customers experience more consistent relationships, and we are able to scale our operations to grow more easily .
The flip side is the direct benefit to each employee owner. That is what we are going to focus on today. We break down some of the monetary benefits but also discuss benefits that go beyond dollars and cents.
More Retirement Contributions
One of the most obvious benefits to a long career with HB Global is the contributions to your retirement account that the company makes on a regular basis. While many companies will provide retirement benefits and may assist in contributions, retirement accounts at HB Global are generally set apart from the rest.
ESOP Account
Let’s start by discussing your ESOP account. In the most basic terms, the longer you stay, the more share allocations you receive, which helps this retirement account to grow.
As you know, HB Global makes a share allocation to your ESOP account based on the amount of shares that we buy back from former HB Global employee owners each year. Each current employee owner will receive a percentage of those repurchased shares based on their percentage of pay relative to the total organization. We expect that this will typically be 3-5% of each employee owner’s total compensation.
For example, if you are making $50,000 per year, we expect that you will typically receive $1,500 to $2,500 worth of shares in your ESOP account each year.
Furthermore, your ESOP account does not move with you from company to company. If you were to leave HB Global (before retirement) or are terminated from the company, you will start receiving distributions after a 5-year waiting period from the date you ended employment.
You will continue to own the shares in your account and they will continue to be impacted by the HB Global share price until distributions are complete; however, you will no longer receive allocations and will not be able to make your own contributions at the new company.
The longer you remain a current employee owner, the more share allocations you’ll receive in your ESOP account.
401(k) Grant Program
As an employee owner at HB Global, you now also receive a 401(k) grant each week. While it’s true that many employers will contribute to their 401(k), most businesses offer a 401(k) match program. This means that the employer will provide a match up to a certain amount only if you are putting aside your own savings.
HB Global is different in that we allocate funds to your 401(k) account whether or not you make your own contributions. We, of course, still encourage you to set aside your own savings as well.
But regardless of whether or not you are actively adding to your 401(k), HB Global will add 3% of your base pay plus overtime each week to your 401(k) account for you to invest in a variety of options available through the program.
Unlike your ESOP account, your 401(k) account does travel with you; however, most employers will require you to set aside your own savings before they match it. Therefore, longevity at HB Global will ultimately have a positive impact on your 401(k) account because of the consistent grants, or “no strings attached contributions ”, that you receive on a weekly basis.
Compounding Growth
There are two factors that impact the value of your ESOP account over time. We already discussed the first factor: annual share allocations made to your account by HB Global. The second factor is compounding growth.
What do we mean by compounding growth in this context?
Each year the HB Global share price gets evaluated based on a variety of factors, including performance over the past year and future expectations. If our share price increases, the value of the shares already in your ESOP account will increase to that new dollar value as well.
Let’s break down an example.
The average annual HB Global share price increase over the last 7 years has been about 18%. If you had $10,000 in your ESOP account and the share price increased 18% for each of the next 10 years, that $10,000 would grow to over $52,000 without any action from you. Plus, you’d get additional allocations from HB Global to your account each year.
It’s important to note that the change in share value is not guaranteed to increase each year and is not guaranteed to increase by a certain amount. But despite potential year-to-year fluctuations, our goal is ultimately to have a steady increase in share price over time which positively impacts your account.
The longer you have an ESOP account, the more chance that it will have to benefit from compounding growth. Therefore, the longer you are with HB Global, the more amount of time you give your account a chance to grow.
Furthermore, the longer you stay, the longer you will get to make your mark on the share price each year. When you produce excellent work and create more raging fans, we produce more financial success which supports an increase in our share price. This then increases the value of your ESOP account.
Personal and Professional Growth
While monetary benefits are an important incentive for longevity at HB Global, we also place a lot of focus on your personal and professional growth. Our goal is to give you autonomy in the context of our core values. By giving autonomy while also focusing on Team, we create opportunities for personal and professional growth.
Financial security is essential for you to achieve stability and peace of mind. Our goal is to make that happen for you so we can then focus on helping you to thrive and feel fulfilled through your work and growth.
By being engaged in your work, seeing an exciting path forward, and knowing you make a positive impact, your work becomes aligned with a purpose that influences all areas of your life.
While this benefit of a long duration at HB Global isn’t tangible through a numerical example, it’s potentially one of the most impactful for you and your family.
Have your own thoughts or questions about longevity at HB Global? Send them to [email protected].