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)

What would be examples of fiduciary decisions the ESOP administrative committee might make?

Fiduciary decisions would include, but not be limited to, making decisions as to the voting of shares in the ESOP where the law does not require a pass through of voting rights to participants, making decisions about investing plan assets both in employer stock and other investments, selling stock, assuring that the ESOP pays no more than fair market value, selecting qualified advisors, assuring that the operation and design of the plan comply with ERISA, and moving assets from the ESOP to another plan. The committee may implement these decisions itself or direct the trustee to carry them out.

By contrast, recommending to the board that the plan be changed or even terminated, voting for one person or another for the board, and doing the normal administration of the plan, presuming it is done in compliance with the law, are all examples of things that are not normally fiduciary acts.

For more details, see ESOPs and Corporate Governance.

Link to this FAQ Topic: Governance, Fiduciaries & Compliance