Employee Stock Ownership Plans: How to Set Up Your Board for Success
Employee stock ownership plans (ESOPs) are a fast-growing method of transferring engineering and construction (E&C) company ownership. As cited in FMI’s recent ownership transfer and management succession (OTMS) industry study, 38% of companies thinking about ownership transfer are looking to implement ESOPs – an increase in the past few years.
In an ESOP transition, a company will select a trustee to oversee the interests of the new company shareholders. Additionally, a new board of directors will be elected with at least one independent (or outside) director. Thus, the board becomes an extension of the trustee in protecting the shareholders.
At this critical juncture, a company has the potential to create a strategic board responsible for growing shareholder value, supporting business continuity and advising the CEO and management team. It can’t be overstated: building a smart, diverse, well-led and well-informed board is a tremendous opportunity to build long-term success.
In this paper we provide best practices that company leaders can take to build an effective ESOP board and ensure a successful transition.
