Employee Stock Ownership Plan

TMC IS PROUD TO BE EMPLOYEE-OWNED.

TMC became Employee-Owned in October 2013. CEO and Founder, Harrold Annett, had the desire to establish a succession plan that maintains the culture of TMC while rewarding employees for their dedication. All eligible employees are part owners at no cost to them through an Employee Stock Ownership Plan (ESOP). ESOP adds financial motivation and ownership responsibility, as research studies consistently show that employee-owned companies perform better than companies that are not employee-owned. 

What is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a type of qualified retirement plan that buys part or all of a company on behalf of employees who are eligible to participate. It is similar to a pension or 401(k) plan, except that instead of being invested in stocks & bonds of outside companies, the ESOP owns the stock of TMC Transportation. The ESOP holds the stock in individual accounts that are set up for each eligible participant. Participants receive the value of their accounts after they leave the company.

When do I become eligible to participate in ESOP?
In order to become eligible for participation you need to meet the following requirements:

1 year of employment
AND
Complete 1,000 hours of service
AND
You are age 21 years or older

You become eligible to enter the ESOP on January 1 or July 1 whichever comes first.

Example: If hired 2/14/2020, assuming you meet the above requirements, you will enter the plan 7/1/2021.

How do I become eligible to receive the annual allocation?
To be eligible to receive the annual allocation, you must meet the following requirements:

• 1000 hours of service that plan year (January 1 - December 31)
• Employed on the last day of the plan year (December 31)

Example: If hired 2/14/2020, and you successfully meet the above requirements, you will enter the plan 7/1/2021. If you work 1,000 hours of service between January 1 – December 31, 2021, and you were employed on 12/31/2021, you would be eligible for an allocation for 2021 on your earnings from 7/1/2021-12/31/2021.

When will I receive my statement?
You will receive a statement in approximately June or July each year you are a participant.

Example: If hired on 2/14/2020, and you successfully meet the above requirements, you will get your first statement June/July 2022.

Will I have to pay for this?
Nope! You do not have to pay for your shares. TMC buys them for you. Consider it a gift!

What if I am a rehire?
Once you have met the eligibility requirements listed above, you are automatically eligible to participate upon rehire. For vesting purposes, each year you worked more than 1,000 hours prior to your rehire, will be counted as a year of service.

Do I pay taxes on my ESOP allocations or distributions?
You do not pay taxes as long as the contributions stay in your account. You do not pay any taxes on any increase in value either. There may be tax implications when you get a distribution:

• If you roll over your distribution to an IRA account or other eligible savings plan, you will not be subject to tax until the amount is later distributed from the IRA or other plan.
• If you do not roll it into an IRA or other eligible plan and you are not yet at retirement age, your distribution will be subject to income tax plus a penalty tax or capital gains taxes depending on what you do with the contribution. 

Will ESOP affect my 401(k)?
No. We will continue to make matching contributions however this contribution will be reviewed and may be adjusted at a later date.

How many shares do I get?
The amount of shares allocated is based on your compensation (including overtime, shift differentials, commissions, and bonuses) as well as tenure.

When do I receive a distribution?
Generally, you may only redeem your ESOP shares if you terminate employment, retire, die, or become disabled. Your distribution amount will depend on your vesting.
Vesting represents the portion of shares you earn each year that you work for the company. A participant becomes fully vested after 6 years of employment. 

What happens to my shares if I leave before I am vested?
If a participant leaves prior to 100% vesting, the portion of the shares not vested is forfeited and will be allocated among remaining ESOP participants. You are 20% vested after 2 years of service, 40% after 3, 60% after 4, 80% after 5, and 100% after 6 years.

Can I invest, withdraw, or take a loan from my account before retirement?
No. An ESOP is a long-term investment plan, and although your money is held much like a bank holds savings, ESOP accounts are held in a trust and cannot be accessed until you leave the company.

What happens if I become disabled or die?
In the case of disability or death, you or your beneficiary will receive your fully vested ESOP account.

What is the value of a share?
Federal law requires an independent appraiser who works for the ESOP Trustee (not for the company) to determine the fair market value of the shares. Under federal law, the appraiser must appraise TMC annually. After this is complete, Annett Holdings, Inc. determines the amount of contribution that will be made to the ESOP, and then it will be allocated to participants in the form of shares.

All participants will receive annual benefit statements at the end of each plan year showing how many shares of stock are owned and the value of their ESOP accounts for the previous plan year. The distribution (pay-out) that you will receive in the future will be based on the fair market value of the shares that are in your ESOP account when they are converted to cash at the relevant future point in time. In other
words, what you see in your account statements will not be the exact value of what you will receive if you leave
the company.

Can I sell some of my stock while I’m still in the ESOP?
Yes, if the following requirements are met:
You have reached the age of 55 AND have 10 years of ESOP participation.
Then you can diversify up to 25% of the company stock from your ESOP into your Annett Holdings, Inc. Employee Savings and Profit Sharing Plan (401k)

What are my rights as an ESOP participant?
ESOP participants have the right to receive information about the plan from their employer, including an announcement of the establishment of the plan, an annual benefits statement, a summary annual report, and a summary plan description. 

Do I have any kind of legal protection?

The ESOP is governed by a federal law called ERISA, which governs all qualified benefit plans. You have specific legal rights that are summarized in the Summary Plan Description. The ESOP Trustee is also legally obligated to protect the interests of the ESOP participants. However, there is no insurance or guarantee of the future value of the stock in your ESOP account.

Do I get a vote?
Participants have some limited voting rights, but the Trustee actually votes the shares. An ESOP does not, in itself, confer any management rights.

How does TMC being an ESOP company affect daily operations?
It does not change daily operations or management. It just shares TMC’s profits with the employees in way of shares. It provides a more lucrative retirement plan for employees. The ESOP adds a new financial award and ownership responsibility component. We ask employees to come to work and give their
best effort because that is the best way to ensure company success and job security, and because it is consistent with our values. With the ESOP, there are two additional important reasons for you to give your best every day: it is your responsibility as an owner, and the success of the ESOP depends upon the overall performance of the company.

Is this a good thing for employees?
Research has shown that participative ESOP companies perform better than companies that do not have an ESOP. Many other ESOPs have been extremely successful. If TMC does well, the ESOP stock could be worth quite a lot of money, but no one can predict how much. It all depends on how well the company performs in
the future. If the company does poorly, the ESOP stock is likely to fall in value. ESOPs do not guarantee any minimum value, however, TMC has a strong track record of solid performance and we hope that continues. As an owner, you share both the upside and the downside.

PURPOSE: This FAQ provides you with a basic overview of the ESOP - and answers questions we anticipate you may have so that you have a better understanding of the ESOP. This is not a substitute for your ESOP Plan Document or other information Annett Holdings, Inc. is legally required to provide to you. In the event of any inconsistency between the information in the Summary and the ESOP Plan Document itself, or to the degree the ESOP Plan Document contains more complete or detailed information or rules, the provisions of the ESOP Plan Document will prevail.