An ESOP (employee stock ownership plan) is a tax-qualified benefit plan that is designed to invest primarily in company stock. Among other things, an ESOP can be used to purchase shares from retiring owners in closely held companies; buy out divisions, product lines, or entire companies; finance new capital; and provide a tax-advantaged employee benefit. There are over 11,000 U.S. companies with ESOPs, covering well over 8 million employees. 
Many ESOPs are leveraged, meaning that the plan borrows money on the employer company's credit to buy company stock. It is the only qualified employee benefit plan that can do this. Moreover, the company can deduct ESOP contributions it makes for both principal and interest payments for the loan, and owners of closely held C corporations who sell to an ESOP can avoid paying capital gains tax on the sale proceeds by reinvesting them in qualifying U.S. securities. 
Written by leading experts, this book is a practical tool for business owners, managers, and advisors dealing with both public and private companies. It covers contribution limits, valuation issues, accounting, the tax-deferred "rollover," due diligence, feasibility, employee buyouts, multi-investor issues, mergers and acquisitions, and other relevant topics. The book is designed to be used by both public and private companies as well as their professional advisors.

Leveraged ESOPs and Employee Buyouts

Business & Money

Rodrick, Scott

Investing

National Center for Employee Ownership

This book takes a broad look at how to use incentives, ranging from stock options to cash bonuses to gainsharing, to motivate and reward employees in dynamic companies that seek to create a more productive "ownership" culture. Using both technical discussions and case studies, it explores incentives both as self-sufficient tools and as complements to retirement-oriented plans such as employee stock ownership plans (ESOPs). Specific topics covered by individual chapters include stock incentives in entrepreneurial growth companies, how incentives fit into the "Great Game of Business," communicating short-term incentives to employees, performance-based stock options, gainsharing and the Scanlon plan, a new type of phantom equity plan, the incentive programs at employee-owned Science Applications International Corporation (SAIC), how to correctly design a cash incentive program, and more.

Incentive Compensation and Employee Ownership

Business Development & Entrepreneurship

This book describes the full spectrum of equity compensation plans (such as stock options, stock purchase plans, stock grants, restricted stock, phantom stock, and stock appreciation rights) available to private and public companies as well as LLCs. Unlike most books on equity compensation, it focuses on helping decision-makers decide what kinds of equity to choose, and who should get how much and when. In the second edition, every existing chapter has been revised and updated, and new chapters on performance awards and limited liability companies have been added.

The Decision-Maker's Guide to Equity Compensation, 2nd Ed

Rosen, Corey

Janich, Daniel

Walter, Dan

Chernoff, Pam

Dodge, Elizabeth

A leveraged ESOP borrows money to buy shares in the sponsoring company in order to buy a major part or even all of the company. It can be used to purchase shares from retiring owners in private firms, buy out entire companies, or finance new capital. With leveraging comes additional cost and complexity. This book discusses how ESOPs work and explains those complexities, providing comprehensive converage of ESOP financing plus chapters on accounting, legal rules, valuation, M&amp;A, and the tax-deferred ESOP "rollover." In the sixth edition, the book has been extensively updated and enhanced. It now features vastly expanded coverage of the intricacies of ESOP transaction financing (including seller financing), plus updates and additions to existing material on legal, valuation, and accounting issues.

Leveraged ESOPs and Employee Buyouts, 6th Ed

Josephs, Mary

Gordy, Vaughn

Hawkins, Neal

Merten, William

Solimine, John

Miller, Rebecca

Finance

Equity Alternatives: Restricted Stock, Performance Awards, Phantom Stock, SARs, and More, 17th Ed

Staubus, Martin

Baksa, Barbara

Coleman, Daniel

Adams, Joseph

Jones, Blair

Business

An employee stock ownership plan (ESOP) is a tax-favored employee benefit plan through which employees can become owners in their companies at no cost to themselves, at the same time that the company and its owners receive major tax benefits. In the right situation and with proper structuring, it can provide advantages for everyone involved. An ESOP can be used for many purposes, including to use tax-deductible corporate earnings to buy out the owner(s) of a closely held business; to allow shareholders to sell gradually and ease out of the business; to finance corporate acquisitions through the loan that buys stock for a leveraged ESOP; to enhance corporate performance through creating a corporate culture of ownership; and to reward employees with a benefit tied to corporate performance while providing the company with tax benefits. Thousands of U.S. companies have an ESOP and millions of employees participate in them, but many businesspeople are still unfamiliar with them. Even those who have some familiarity with ESOPs often have misconceptions about them. This concise book is designed to educate anyone who is interested or involved in ESOPs about what they are, what their history is, how they work, and what their benefits are to both the employer and the employee-participants. The 19th edition updates the existing material as of early 2020, with particular attention to the chapter on valuation.

An Introduction to ESOPs, 19th Edition: How an employee stock ownership plan (ESOP) can benefit your company, its owners, and its employees

Inside fiduciaries for ESOPs have substantial legal responsibility and risk. Making sure an ESOP complies with the law and the plan document is the best insurance against costly legal problems, and at the same time it builds trust and credibility for employee ownership among plan participants. This book is meant to provide an overview of life as an inside ESOP fiduciary. It alerts the reader to the key issues, including ESOP basics, fiduciary issues, valuation scenarios fiduciaries may face, working with appraisers, board-trustee interactions, and fiduciary insurance. The fourth edition has been updated throughout as of 2020 to reflect new information and guidance, including new court decisions and data on DOL investigations. A new chapter was added on working with valuation analysts to set ESOP share prices.

The Inside ESOP Fiduciary Handbook, 4th Ed

Ash, Merri

Gelburd, Jeffrey

Karlsen, Casey

Webber, Seth

Management & Leadership

Although almost 7,000 U.S. companies have an employee stock ownership plan (ESOP), many businesspeople are not well acquainted with them. ESOPs are often confused with stock option plans, which are something else altogether. They are not stock purchase plans; employees almost never buy stock through an ESOP. They do not require that employees run the company or even elect the board, unless companies want to structure themselves that way. Most people, in fact, would be well served by forgetting what they have heard or thought about ESOPs before starting to learn more about them. This book will teach you what ESOPs really are, how they work in both C and S corporations, what their uses are, what the valuation and financing issues are, what the steps to set them up are, and much more.This book was originally published in 2008 and then updated in various respects for the 2013, 2014, 2016, and 2018 versions and now for this 2020 version. In this update, the old chapter on valuation has been replaced with a newly updated discussion of how valuation works in an ESOP context. The chapter on choosing consultants was extensively rewritten to address contemporary situations and concerns more clearly. In addition, other routine clarifications and updates were made throughout the book (for example, at the end of 2019 the SECURE Act increased the age 70½ threshold for minimum required distributions to 72, so the chapter on distributions was updated accordingly).

Understanding ESOPs, 2020 Update

A leveraged ESOP borrows money to buy shares in the sponsoring company in order to buy a major part or even all of the company. It can be used to purchase shares from retiring owners in private firms, buy out entire companies, or finance new capital. With leveraging comes additional cost and complexity. This book discusses how ESOPs work and explains those complexities, providing comprehensive coverage of ESOP financing plus chapters on legal rules, valuation, M&A, and the tax-deferred ESOP "rollover."In the seventh edition, the book has been extensively revised, with chapters updated, removed, and added to make it a more practical and straightforward guide for the business owner, executive, employee group, advisor, or lender. New chapters discuss frequently requested topics such as warrant strategies and seller financing, plus bank financing and alternative sources of capital.

Leveraged ESOPs and Employee Buyouts, 7th Ed

Solomon, David

Carls, Regina

Carstens, Philip

Kaczmarek, Dan

Equity Alternatives: Restricted Stock, Performance Awards, Phantom Stock, SARs, and More, 18th Ed

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