Employee Share Ownership Plans
When creating a business and setting up the structure of your company, there are a variety of options available to you. One thing that publicly owned companies must determine is how the company will be shared through stock ownership.
Publicly traded businesses do this by having a shareholder group, which is composed of people who own stock in the company. Typically stocks are bought or traded, but another way which has become more common in the last few decades is to grant employees shares in a company’s stock through an employee share ownership plan. An employee share ownership plan is most often viewed as an employee benefit plan as share are almost always given to the employees and not something that the employee has to buy.
An employee share ownership plan usually operates through a trust fund that the company sets up and into which the company places money or new shares of their stock. Shares are then distributed to individual employee stock accounts based on pay, seniority or another type of equitable distribution plan. As employees continue to work at the company, they are given greater access to their stock. If an employee chooses to leave, the company must buy their share of stocks.
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Depending on your company, an employee share ownership plan may be beneficial to both you and your employees. At Texas Legal Entities, our Texas business formation professionals can give you valuable advice about employee share ownership plans or a number of various other business components. Contact us today at 512-472-2431 to speak with a representative who is prepared to provide personalized attention and meet any of your business needs.
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