Employee Stock Ownership Plan Design and Compliance

Summary

This practice note addresses the issues related to employee stock ownership plan (ESOP) design and administration. An employer considering adoption of an ESOP, whether as a supplemental employee benefit plan or as a means of corporate financing in a tax-advantaged manner, should first conduct a feasibility analysis to determine whether an ESOP would be financially and culturally appropriate for the company. After making the decision to adopt an ESOP, there still is substantial work to be done, including designing the ESOP before adoption and administering the plan after adoption.