🠈 Employee Stock Ownership Plans 🠊
Employee Stock Ownership Plans
An Employee Stock Ownership Plan (ESOP) is a structured program for employee stock ownership of a company. This page will list ESOPs that I encounter as I explore ownership of businesses in my local community.
The idea is not as innovative as some articles make the idea sound. In traditional small businesses, it was common for the owners to work and for workers to have varying degrees of ownership in the employer.
NOTE: An ESOP is similar to employee stock options and pension plans that invest employees' pensions in the company.
The one big problem with employee ownership plans is that the plans create a situation in which employees' paychecks and pension are invested in the same company. When an ESOP goes bankrupt, the employees lose both their jobs and their savings.
This next section will list events related to the ESOP movement.
- 1956: A financier named Louis O.Kelso created a tax qualified employee stock ownership plan that engaged in a leveraged buyout of Peninsula Newspapers, Inc..
- 1974: The Employee Retirement Income Security Act of 1974 (ERISA) included tax policies specific to ESOPs.
- 1996: The Small Business Job Protection Act allowed ESOPs to register as an S corporation.
- 2004: The founders of Wood Mizer, which makes portable saw mills, transferred ownership of firm to an ESOP.
References:
- Menke - ESOP History (Drawn 12/14/2022)