The relationship between employee ownership and corporate governance depends on the legal form of employee ownership–read on for specifics about ESOPs, equity compensation plans, and other forms of employee ownership.
On average, ESOPs are wins for everyone—sellers, employees, and the company itself—but the average is pulled up by a handful of stellar ESOP companies.
Under ERISA, the ESOP trust is the legal owner of the shares in an ESOP. The trustee votes these shares, usually at its discretion but occasionally at the direction of plan participants. That includes voting for the board.
Initial results from the NCEO’s 2016 survey of corporate governance practices in ESOP companies show the range of current practices in the composition and compensation of boards of directors and the various approaches companies take toward ESOP trustees.
