ESOP Buy-Out of Parsons Wins Approval

At a brief special meeting Monday, shareholders of Parsons Corp. voted to approve the acquisition of the company by an Employee Stock Ownership Plan.

The ESOP purchase of Parsons, a Pasadena-based engineering and construction firm, is the largest such employee buy-out in history.

The company has 7,000 employees worldwide.

Approval of the plan was a certainty since the ESOP already owns about 94% of the outstanding Parsons shares. Shares representing 65% of the outstanding stock, acquired as part of the ESOP purchase offer, are controlled by a committee of three executives appointed by Parsons management. Voting power for shares representing the remaining 29% held by the ESOP was passed to individual Parsons employees.

A Parsons spokesman said the vote was “overwhelmingly” for approval, but the company said it would not release vote totals after the meeting.

Letters of Protest The vote will be disclosed, however, in a subsequent filing with the Securities and Exchange Commission, the spokesman said.

At least three Parsons employee groups with several dozen participants have written letters of protest regarding the ESOP plan to the Internal Revenue Service and the Department of Labor.

The letters raise concerns about the $32-per-share price being paid to non-ESOP shareholders while ESOP shares may be valued at much less in the future.

The letters also claim that management will be unfairly rewarded and will not be accountable under the plan.

Meanwhile, Parsons Chairman William E. Leonhard issued a statement Monday on various issues raised by the dissident employees.

Leonhard said the ESOP was carefully drafted “to meet all the requirements for qualification” by government agencies.

He said that management has not received any special benefits, that the plan is not intended to entrench management control and that it protects employee retirement holdings of stock.

He also said he is not surprised that “a few employees” have written letters of protest.