Find Your Resource

As the secretary of the board of directors, I am writing to update members of the NCEO about your organization after a year of social and economic disruption.

Compensation surveys provide key insights into job roles and their salaries that help employers determine appropriate compensation strategies and recruit competitively. While industry and overall surveys may contribute to compensation analysis, having an ESOP affects a company's culture and regulatory burdens, and therefore it has specific implications on compensation amount and structure.

Filing data for 2020 and 2021 indicates a moderate uptick in new ESOPs, over 60,000 new active participants, and a strong two years for the construction industry.

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.

An important question in the ESOP community is the circumstances surrounding plan terminations. To help provide some clear answers, we analyzed all plans that terminated since our last report on this topic in March 2021. This primarily covers filing years 2020 and 2021.

This article is based in part on an NCEO webinar presented by Anthony Dolan and Macie Dorow of Prairie Capital Advisors.

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.

The only source of data on what ESOP companies do to predict and manage their obligation to repurchase shares from former ESOP participants is the NCEO’s survey, and this article shares some highlights from the most recent round. 

In the face of an economic downturn, many companies are looking at ways to restructure executive compensation. In some cases, it may be to reduce executive pay; in others it may be as a way to change incentive pay so that it is more aligned with current realities.

At the NCEO Annual Conference in Kansas City, a husband and wife who were owners of a company considering an ESOP asked if I had some time to chat. They had come to the conference excited about the idea of selling their company to an ESOP, but now, they were not so sure. They liked the idea of employees being owners, and the tax benefits were appealing, but they said that in session after session, they kept hearing about all the litigation and investigation risks, that the DOL really does not like ESOPs, and that the plans were complex. They had been told to expect to pay hundreds of thousands of dollars to set up an ESOP in a company that had about 50 employees.