Start, success and benefits of an ESOP

///Start, success and benefits of an ESOP

Start, success and benefits of an ESOP

While many people move from job to job, others settle in for the long haul. Upon finding a position that offers security, consistency and, most importantly, the financial requirements to care for their families, many people simply decide to stay with their employer until they’re ready to retire.

But for some, a company shakeup – or the economy taking a turn for the worse – can leave some workers without a job, along with the benefits and money that come with it. And while that is a very real possibility for many people throughout the United States, other companies are turning toward a different way of thinking, and it’s probably been around longer than you’d expect.

An employee stock ownership plan (ESOP) technically dates back to the early 1920s when companies like Sears Roebuck, Procter and Gamble and Pillsbury offered options for their employees that provided stock ownership through the vehicle of a stock bonus plan. In 1956, economist Louis O. Kelso created the first ESOP that met the necessary tax exemptions when he set out to help transition the ownership of Peninsula Newspapers. Kelso saw the benefit of giving all employees a share in companies, while using this IRS tax qualification as a tool for business succession.

Since then, there have been many uses for ESOPs. From utilizing this method in an attempt to save a failing company – such as Chrysler (1979), Weirton Steel (1984) and United Airlines (1995) – to defending the company from a hostile takeover – such as the Hi-Shear Corporation in 1973 – an ESOP offers an exit for embattled companies.

However, CEOs aren’t looking at ESOPs as a defense method but as a way for truly giving back to their companies and employees.

Read more at Start, success and benefits of an ESOP

2017-07-13T14:50:02+00:00 Tags: , |