National Pi Day
Today, March 14th is Sarah, my youngest daughter’s, birthday. She has assured me over the years that this is a significant holiday that should be properly recognized. It turns out that she is correct as March 14th is National Pi day. In fact, this year marks the 26th anniversary of celebrating all things pi.
A little background on Pi
For those of you like me that haven’t taken a math class in decades, Pi is the ratio of the circumference of a circle divided by its diameter. It is approximated at 3.14 (which means that the distance around the circle is 3.14 times the distance across the circle) although the actual number has been calculated to ten trillion digits (1013).
For mathematicians (and realistically everyone) pi is a big deal. In addition to its importance in geometry and trigonometry, it is important in statistics, thermodynamics, mechanics and electromagnetism to name just a few. It is clearly not just another number.
What’s the special number for an ESOP then?
Employee Stock Ownership Plans (ESOPs) also have a number that is a pretty big deal – their annual valuation. The Employee Retirement and Income Security Act (ERISA) requires that an ESOP obtain an independent valuation of the company each year. This valuation serves a multiple purposes:
- Provides a critical input for participants to value their account and plan for retirement
- Allows the proper number of shares to be allocated to each participant’s account if any contributions are made
- Allows distributions to be properly valued for participants
- Provides a value to the trustee for validating any other transactions with parties outside the ESOP
No surprisingly, the announcement of the share value is a highly anticipated event at many ESOP owned companies. After all, it is a big deal.
For those of you that are interested, here are the first 100 digits of pi
For those of you that want even more, the following link will take you to pi to the 100,000th digit.
In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter – @jlripperger.
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