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ESOP company boards and ESOP trustees both have fiduciary obligations under ERISA to act in the best interests of employees as shareholders.

Based on my involvement with a number of ESOP boards and my own experience as CEO and chairman of the board of OwnersEdge, a Wisconsin-based ESOP holding company with five affiliates, I’ve noticed an opportunity for more strategic board leadership.

During the last 15 years, benefit corporations have seen explosive growth. Originally inspired by frustration about the lack of a legal tool to allow Ben & Jerry’s to resist being purchased by Unilever, benefit corporations are intended to facilitate socially responsible businesses.

When doing an ESOP transaction, it’s natural to focus on the deal structure, financing, plan rules, valuation, and other steps to crossing the finish line. But there are other steps worth taking early on to ensure the ESOP works well for everyone involved.

The NCEO has surveyed ESOP companies since 2015 on their executive compensation to provide robust and ESOP-specific third-party compensation data. Our 2020 ESOP Executive Compensation survey received 424 valid responses, the largest group in the survey’s history.

Boards of directors can be something of a mystery to employee-owners. Who is on them and what do they do? Do they run the company or just act on a few major issues? Whose interests are they meant to protect?

Since 2005, the NCEO has conducted periodic surveys of ESOP companies on their corporate governance practices, such as board compensation, how the board is constructed, and how trustees are selected and paid.

Building the right board and setting appropriate compensation are key considerations for any company, arguably even more so for ESOP companies. The NCEO ESOP company survey provides some of the only data to help ESOPs with meaningful comparisons.

The NCEO ESOP Corporate Governance Survey is designed to help companies learn how other companies are handling the unique governance issues faced by ESOPs. This year’s survey collected responses through May and June from 302 privately held ESOP companies.

Many of you reading this have boards on which most directors are not employees of your company, and that’s the situation at the NCEO too. Our board has 21 outside directors and two insiders. Each of the NCEO’s directors makes the board stronger.