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ARTICLE · 16 APRIL 2026

Those Unpredictable Teen Years: A Practical Guide To Considerations For Maturing ESOPs

Foley & Lardner LLP
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Employee stock ownership plans face mounting challenges as they mature, including rising repurchase obligations, diversification requirements, and complex compliance issues.

United StatesEmployment and HR
Kathleen Dreyfus Bardunias
Kathleen Dreyfus Bardunias
Gage M. Maurer
Gage M. Maurer
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Employee stock ownership plans (ESOPs) have proven to be powerful tools for aligning employee interests with company success and creating significant retirement wealth for participants while providing business owners with attractive succession options. But what happens when the ESOP grows out of its early years and transitions to its pesky (and sometimes unpredictable) teen years? For many ESOPs, new challenges emerge, including mounting repurchase obligations, mandatory diversification requirements, Section 409(p) compliance concerns, and the unpredictable impact of external economic shocks. This article explores these critical issues and offers practical guidance for companies sponsoring a more mature ESOP.

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