I’ve worked for two companies that had ESOPs while they were privately traded. In both cases, the companies were sold to larger corporate entities that promptly got rid of the ESOP.
Not that it is all that bad. One sale happened after I left the company. The sale of the company included the shares owned by employees through the ESOP. So for one sale, I got several tens of thousands of dollars (hadn’t been part of the ESOP that long) and the other company’s sale gave me about 150% of my current salary. Both went right into retirement accounts to defer taxes.
The mood or “culture” was better, I think, during the ESOP period. Certainly cost saving was more on everyone’s mind, because every company dollar unspent was part of the profit and increased the valuation.
Thanks for sharing your experiences. Very curious to ask a few questions:
How was your experience being an employee-owner at either one of these companies? Did you receive any transparency of the ESOP plan (distributions, allocations, etc.)?
For both companies, how did you receive the funds once the companies were sold to the larger corp companies (cheques, direct, etc.)?
It may have been culture brainwashing, but we definitely felt more of an ownership vibe. We awaited the periodic valuations that the ESOP share price was based on and the process seemed relatively transparent.
An accounting and legal firm handled the dismantling of the ESOPs. We received a letter itemizing our shares and the value based on the company sales price. Then a few months later, we got a check (which you could have made out to your IRA management or whoever or to yourself if you were ready to pay taxes on it.
In the case of the company I’d left, I had to wait 6 years to get paid out (turned out to be about 4.5 because of their sale).
Not that it is all that bad. One sale happened after I left the company. The sale of the company included the shares owned by employees through the ESOP. So for one sale, I got several tens of thousands of dollars (hadn’t been part of the ESOP that long) and the other company’s sale gave me about 150% of my current salary. Both went right into retirement accounts to defer taxes.
The mood or “culture” was better, I think, during the ESOP period. Certainly cost saving was more on everyone’s mind, because every company dollar unspent was part of the profit and increased the valuation.