ESOP redux. (Wall Street West).

Last week's column item about ESOPs (employee stock ownership plans) drew spirited comments from pro-ESOP forces out there, including from Chris Kramer, of the Long Beach-based SEG Companies Inc. SEG performs evaluations for companies considering an ESOP, and sets up ESOPs for a few clients every year.

"Actually, when business valuations are down, that is the perfect time for an ESOP," Kramer said. "The buyers are getting a good price. The seller is getting a tax break (a onetime, tax-free treatment of capital gains, if rolled over into domestic stocks). For many owners, there is no other way to sell."

True, employees shouldn't have all their assets in one company, Kramer said. But ESOPs can co-exist side-by-side with 401(k) programs, which allow employees to diversify. Kramer conceded that shuttering 401(k) programs and then converting them to ESOPs might be a bad idea "But to mention an Enron in connection with most ESOPs is not fair' he said. "Enron was about fraud. Fraud is what is bad, not ESOPs."

Kramer added that SEQ performs valuations for a flat fee, set in advance.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. He can be reached at [e-mail].