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W W W. M A I N E B I Z . B I Z 5 O C T O B E R 2 1 , 2 0 2 4 ESOP (Employee Stock Owner- ship Plan): A qualified retirement plan that allows employees to own shares in the company, often used as a corporate finance strategy and a tool for employee motivation. Participant: An employee who is eligible to receive benefits from the ESOP and can acquire shares of the company. Trust: A legal entity that holds the shares of the company on behalf of the employees participating in the ESOP. Vesting: The process by which employees earn the right to their allo- cated shares over time, usually based on their years of service. Allocation: e distribution of shares to individual employee accounts within the ESOP based on a prede- termined formula, often tied to sal- ary or years of service. Distribution: e process by which shares or cash value are given to par- ticipants when they retire, leave the company or reach a certain age. Repurchase obligation: e compa- ny's legal obligation to buy back shares from participants when they leave or retire, ensuring liquidity. Leverage: Refers to the borrowing of funds by the ESOP to purchase company shares, allowing for imme- diate ownership while spreading the cost over time. Fair market value: e price at which shares would trade in an open mar- ket, used for determining the value of shares in the ESOP. Stock valuation: e process of deter- mining the fair market value of the company's stock, usually performed annually by an independent appraiser. ESOP loan: A loan taken by the ESOP to buy shares from existing shareholders, which is then repaid using company contributions or cash flow. Employee buyout: A process where employees acquire a significant or controlling interest in their com- pany, often facilitated by an ESOP. Source: ESOP Partners, Mainebiz research 2023 ESOP Association New England Chapter Company of the Year Wealth Management Business Insurance Personal Insurance Employee Benefits 2024 Oces in Rockland, Camden, Belfast, Southwest Harbor and Waterville AllenIF.com (800) 439-4311 Allen Financial, 31 Chestnut St., Camden, ME 04843. (207) 236-8376. Securities and Advisory Services oered through Commonwealth Financial Network®, Member FINRA, SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not oered through Commonwealth Financial Network. 2023 ESOP Association New England Chapter Company of the Year, created by Best Companies Group. This award was presented on 03/15/23 and is based on employee and employer surveys and not specic to nancial services and does not imply an endorsement, recommendation, or reect the performance of the advisor. Go to https://www.esopassociation.org/chapters/ new-england/awards 2024 Best Places to Work in ME, created by the Maine State Council of the Society for Human Resource Management, the Best Companies Group, and BridgeTower Media. 2024 Award was presented on 8/14/2024 based on an evaluation of each nominee's workplace policies, practices, demographics, and an employee survey and is not specic to nancial services and does not imply an endorsement, recommendation, or reect the performance of the advisor. Visit www.bestcompaniesgroup.com/best-places-to-work-in-maine for more information. The ESOP vocabulary: Terms for success A first step to understanding an Employee Stock Ownership Plan is learning some key terminology.