A key step in the process of establishing and structuring an ESOP (employee stock ownership plan) company is identifying, vetting, and selecting a qualified ESOP trustee.
An integral part of the ESOP Corporate Governance process, the ESOP trustee holds an essential role as the legal shareholder of the shares held by the ESOP trust.
This shareholder position is a fiduciary role that involves numerous, critical responsibilities.
So, what are an ESOP trustee’s fiduciary responsibilities? What about other ESOP-related trustee duties?
Here, we’ll walk through the fundamental duties and responsibilities of an ESOP trustee:
- Satisfy ERISA fiduciary responsibilities
- Engage the independent ESOP appraiser
- Establish the annual ESOP stock price
- Vote ESOP shares to select the board of directors
- Manage assets of the ESOP trust
- Ensure plan documents are followed
- Thoroughly document decision-making processes
It’s hard to overstate the importance of choosing a qualified ESOP trustee, given the need for due diligence in every decision related to ESOP transactions. ESOP trustee responsibilities, when properly executed, ensure regulatory compliance and a healthier ESOP company.