What Are the Ongoing Duties You Should Expect for an ESOP Trustee?

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:

  1. Satisfy ERISA fiduciary responsibilities
  2. Engage the independent ESOP appraiser
  3. Establish the annual ESOP stock price
  4. Vote ESOP shares to select the board of directors
  5. Manage assets of the ESOP trust
  6. Ensure plan documents are followed
  7. 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. 

ESOP Repurchase Obligation: Capturing your ESOP Distribution Policy

We have recently discussed the importance of Identifying your Long-Term ESOP Objectives and Developing Accurate ESOP Repurchase Obligation Forecast Assumptions as part of the ESOP Repurchase Obligation process.  Today we will look at the significance of the ESOP Distribution Policy. Here is a quick summary of the various Timing of ESOP Distribution rules: 

ESOP Repurchase Obligation: Developing your Forecast Assumptions

Keep Your ESOP On Track and On Time
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