Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

Can a company true-up ESOP account balances for employees who received distributions prior to a sale of the company at a premium in the same year?

When ESOP companies are sold at a premium, employees who received a distribution and cashed in their shares or received cash in lieu of shares prior to the sale will have lost out on a potentially significant windfall. Some companies true-up the distributions of these participants to reflect the difference. Generally, this would apply only to distributions that occurred in the same plan year as the sale. The true-up will reduce what other participants receive.

Link to this FAQ Topic: Distributions & Repurchase