MTM’s Member Dividend Program – 2021
On December 23rd, the MTM Board approved a $3 million member dividend declaration to be paid March 1, 2021. Let me give you more details how the MTM member Board and MTM member Finance Committee came to this decision. Dividends are paid out of annual profits. While the year is not yet over, we have some predictions of what the year looks like, and all, at this point, look to show that 2020 was a profitable year. It is always the goal of the Board Committees and full Board to return profits to our member-owners. So, this process started on Thursday, December 3rd, with the regularly scheduled Board Finance Committee. This Committee is made up of members: Teena Kowalski – Repair Clinic, Barry Kavanagh – Avalon and Tahoe, Gary Sievert – Wellington Industries, Andrew Varenytsia – Romeo Rim, Jerry Decker – Precision Boring, Jack Accardo – Haller International Technologies, Joe Keppler – Shuert Industries and Gerd Walter – Creative Automation and Kurt Heuser. The Committee members took the management recommendation of $2.5 million and questioned management on assumptions and details for the 2020 profit projection. At the end of a hardy discussion, the Committee felt the profit would be likely higher than management suggested, and decided that instead of the $2.5 million profit estimate $3 million was more probable.
This recommendation, then, sits for three weeks, so that we can get a better handle on any surprise losses for December. On December 23rd, the Committee’s recommendation is forwarded to the MTM Board for their review and decision. On December 23rd, the full Board took the Board Finance Committee recommendation of $3 million estimated profit for 2020. They reviewed the material sent to them by the Committee and their final recommendation. The full Board, which is made up of: Jack Accardo – Haller International Technologies, Joe Keppler – Shuert Industries, Bobby Cox – Acorn Stamping, Jerry Decker – Precision Boring, Brad Lawton – Star Cutter, Richard Smith – Wolverine Bronze, Teena Kowalski – Repair Clinic, Mark Mullen – Griggs Steel, John Moll – Gemini Industries, retired and Kurt Heuser. The Board unanimously approved the recommendation of the Board Finance Committee and the $3 million will be paid on March 1, 2021.
The reason all of this is done before yearend when the final profit is not yet known, has to do with taxes. By declaring $3 million before 12/31, $630,000 in taxes are saved. This tax money increases the amount that we can return to our memberowners. The goal each year is to declare an estimated profit in December for tax purposes, and then at the end of January, determine the final profit, and if it is higher increase the dividend amount, which is actually paid to our members on March 1st. As an example, in December 2019 the Board Finance Committee approved $3.5 million of estimated profit. After the first of the year, we determined our actual profit was $950,000 higher. This amount was also declared, and a final dividend payment in March was made to our members of nearly $4.5 million.
Now, you have the details of how the MTM member dividend is calculated and managed. This will be the seventh annual member dividend in a row. As a small member owned company, once all claims accounts are fully funded, the best place to return any profits is to our member-owners. This is how a small mutual/co-op member-owned company should operate.
By the time you receive this, the holidays will be over and we’ll have started 2021. I’m sure we all can say that we’re delighted 2020 is behind us and we all hope that there will be more normal life and activities in 2021. Until later.
