For example, says Julie Govreau, "ESOPs
absolutely are a good idea, (especially) for the owner of a small business looking to transition and the kids don't want to take over." ESOPs
, she says "are a fantastic tool that allows for the continuity of the business."
are employee stock ownership plans that own shares of corporations for the benefit of the employees of the corporation.
Some sellers can defer, or potentially even eliminate, the payment of capital gains taxes on the sale of stock to an ESOP
, provided they meet eligibility requirements.
works well if the firm is profitable and growing, if ownership likes the company's culture and wants to preserve it, if owners wish to reward their employees and retain them, and if the owners want to realize significant tax benefits," said Gregory Hogan, a director at employee-owned SC&cH Group, who leads the ESOP
advisory practice for the consulting, audit, and tax firm based in Sparks, Md.
In addition to such tax advantages, an ESOP
provides a way for business owners to sell their shares at appraised value, if there are no other obvious buyers.
If the owner is willing to transfer the shares to a key employee for little to no consideration, the share transfer will likely be treated as compensation, so that it will become subject to income and employment taxes at its fair market value--making the traditional ESOP
strategy unappealing for some clients.
As of 2015, there are an estimated 7,000 ESOPs
covering about 13.5 million employees.
It remains to be seen exactly how ESCA will develop the framework for UAE companies to structure and implement their ESOPs
. In the meantime, pending issuance of the Resolution, specific direction and input from ESCA is required before the implementation of an ESOP
(for public and private joint stock companies) is possible.
So, the rest of this article will describe the basic ESOP
structure and explain its numerous and considerable advantages, along with its primary disadvantage.
2015-224, reiterated that lesson in cases involving two Kansas corporations that used the same ESOP
Some of the growth in S ESOP
employment is attributable to firms hiring more workers, and some of the growth is attributable to the rising popularity of S ESOPs
Though conventional wisdom drives you to that conclusion, in reality a new breed of wealth creators has emerged ever since the employee stock option plan (ESOP
) was pioneered by Infosys in the mid-nineties.