This article combines a set of essays written from 2012 to 2016 on Section 409(p), the rules that seek to prevent S corporation ESOPs from being used as abusive tax shelters.
Last weekend, I had the privilege of listening to one of my favorite ESOP people, Roger Ryberg of Windings, Inc., talk about the ESOP at his company at a conference of the Business Enterprise Institute.
1995 was a good year for United Airlines. It was the first year under its new ESOP, which owned 55% of the company. It was also the best year for shareholders in the company's 70-year history, outperforming Standard & Poor's by 67%, increasing shareholder value by over $4 billion.
In the face of the now seeming certainty that stock options will have to be expensed, there is a great deal of conversation about how companies will and should handle broad-based equity compensation plans in the future.
Often, people are confused about the exact roles and responsibilities of the numerous parties involved in the operation of a plan covered by ERISA (the Employee Retirement Income and Security Act of 1974) and the broader responsibility for the operation of an ESOP company.
The data for ESOPs as summarized in our Statistical Profile of Employee Ownership show a large drop in the number of new ESOPs between 2002 and 2005, then stabilization around 7,000 plans. What accounts for this decline?
Using an ESOP for Business Transition Can Be Complicated, But Selling to an Outside Buyer Is Often Uncertain and Even More Complicated with Less Flexibility and Fewer Tax Benefits
