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V O L . X X X N O. X X I V § 2 O C T O B E R 2 1 , 2 0 2 4 20 E mployee Stock Ownership Plans, or ESOPs, are having a bit of a heyday. For many business own- ers, ESOPs offer an ideal succes- sion option, providing a viable exit strategy, while preserving operational excellence, management and com- pany culture, and giving employees a vested interest in the company's long-term success. In Maine's chronically tight labor market, the value of having team members who have a literal stake in the company's future cannot be underestimated. Today, there are 6,467 ESOPS in the U.S. holding more than $1.6 trillion in assets. More than 225 new ESOPS covering 41,154 participants were created in 2020 alone, the most recent year for which data is available. Here are some important factors to think through if you're wondering whether an ESOP is right for you. First, think fit. One important dynamic that factors into ESOP success is company culture. In the ESOPs that thrive, pride of owner- ship is already genuinely felt among the people who work there. Employ- ees consider themselves team mem- bers, not just workers, and feel a real sense of responsibility to see col- leagues, and the broader organiza- tion flourish. ey clearly understand how their daily contributions make a difference in the company's perfor- mance and reap a sense of satisfac- tion out of it. at kind of culture can't be created on the fly — it can only be built and nurtured over time. Get buy-in from the beginning. Often the decision to convert to an ESOP is made by the company owner, or one or two senior executives, and details are kept close to the vest until the final decision is made. But ulti- mately the implementation of the ESOP is done by the management team that remains with the company after the conversion is complete. at team must be brought into the consid- eration process early on, as you're laying the groundwork, to ensure that those individuals understand how the ESOP will impact their roles and opportuni- ties, and that they're on board with it. Prioritize communication. A major benefit of an ESOP is that it gives employees a vested interest in the company's success. To really instill that sense of ownership, it's critical to ensure that all participants, from the management offices to the produc- tion floor, understand what the ESOP means for them. It's also important to keep them informed about how their daily efforts and decisions, about everything from which supplies to purchase to which vendors to use — impact shareholder value. All ESOPs should establish a communications committee, made up of participants from all levels of the organization, to keep information flowing. Reach out for help. By law, an ESOP must appoint a trustee to over- see the ESOP administration, like determining the value of the stock and coordinating with attorneys to ensure plan documents are being fol- lowed. Some ESOPs have an officer or executive serve in this role. Engaging an independent trustee, particularly an institutional trustee, enables the com- pany to tap into a team of experts who have experience with many different types of ESOPs and whose focus is to keep your plan on track throughout the lifecycle of the ESOP. Laura Pfeiffenberger is a senior vice president a n d E S O P c l i e n t a d v i s o r f o r S p i n n a k e r Trust, which is based in Portland. How to set yourself up for ESOP success B Y L A U R A P F E I F F E N B E R G E R B Y L A U R A P F E I F F E N B E R G E R H OW TO

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