An ESOP Top Ten List

This article originally appeared in the quarterly newsletter for the members of the New South Chapter of the ESOP Association.

Issues for ESOP Companies, Trustees, and Other Fiduciaries to Consider in Connection with the Creation and Administration of an ESOP

On one level, an employee stock ownership plan ("ESOP") is nothing more than a tax-qualified, defined contribution plan designed to invest primarily in qualifying employer securities, generally the common stock of the plan sponsor. ESOPs can be used by both publicly traded and privately held companies in any number of ways, including a tax- advantaged method for the sponsor to raise new capital, a tax-advantaged way for one or more existing shareholder(s) to dispose of some or all of their stock in the plan sponsor, or even as part of a divestiture of a division or subsidiary of the plan sponsor. Regardless of how an ESOP is used, there are some unique concerns that plan sponsors, trustees, and other