For media inquiries, please contact:
Roxana Janka

310-752-4485

Stay Connected



The Phelps Group on Twitter



Sign up for our Creative Strategies newsletter

 


Why build an Employee Stock Ownership Plan?

You're a business owner, you're a long-term planner and you'd like to have a succession plan that benefits you and the people who've helped you build the business.

If that's the case, then the you'd probably like to:

  • Have your business continue beyond your own career.
  • Sell your stock to the company's employees in a tax-free exchange.
  • Balance compensation to your employees between salaries, profit-sharing and company stock, with the stock being tax-deferred for the buyer and the seller.
  • Have the employees act like owners instead of employees and drive the value of the business even higher.

An Employee Stock Ownership Plan (ESOP) can help you achieve these goals. Many books and articles are available on this subject. So I'll keep this article short and simply hope that it stirred your interest in starting an ESOP to the extent that you'll research it further.

Related sidebar: 80% of America's workforce are employed by businesses with less than 100 employees. The future of our social security system is suspect. Wouldn't it be great if more citizens actually owned part of the business they work for? Think of the advantages for everyone involved.

Tagged under:

Comments

Ken Whyte said:

Joe - have you experienced any problems or challenges with teammates who are familiar/used to their role as employees, but are now also 'shareholders'? I see the positive potential in attitude change - are there any negatives to watch out for?

April 4, 2008 6:49 AM

Joe Phelps said:

Ken,  We haven't experienced any negatives.  I have heard from other CEOs whose companies have ESOP plans that once it gets going that people come in and say things like for example, "why did we get that new copier, we don't really need it."

People care more, and they want to get involved in things they care about.  So it could cause you to take more time to explain your decisions -- yet it can get more brains involved, too.   Hope that answered your question.  tx Joe

April 7, 2008 9:11 AM

Leave a Comment

(required)  
(optional)
(required)  
Add