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Total Articles: 7

Description and Purpose of an ESOP

An employee stock ownership plan (“ESOP”) is an employee benefit plan qualified for tax-favored treatment under the Internal Revenue Code of 1986, as amended (the “Code”). A plan is “qualified” if it complies with various participation, vesting, distribution, and other rules established by the Code.

An Introduction to Employee Ownership and Selling to an ESOP

Perhaps one of the most powerful tax and business succession planning tools available to shareholders of a closely held company is the ability to sell stock to a trust created pursuant to an employee stock ownership plan (“ESOP”) and defer or permanently avoid taxation on any gain resulting from the sale.

Tax Incentives for Employee Stock Ownership Plans

Tax incentive enacted by Congress to promote increased use of employee stock ownership plans include advantages for the sponsoring company and the participating employees. This article reviews some key incentives.

Supreme Court Rebukes Ninth Circuit’s Disregard of Prudence Precedent for Employee Stock Ownership Plans

Providing a specific, stringent pleading standard for claims alleging breach of the duty of prudence against fiduciaries who manage employee stock ownership plans (ESOPs), the U.S. Supreme Court again has reversed the Ninth Circuit Court of Appeals, in Amgen Inc. v. Harris, No. 15-278 (Jan. 25, 2016), because of its failure to apply the proper pleading standard for such claims.

SUPREME COURT REBUKES NINTH CIRCUIT’S DISREGARD OF PRUDENCE PRECEDENT FOR EMPLOYEE STOCK OWNERSHIP PLANS

For the second time in Amgen Inc. v. Harris, the Supreme Court reversed the Ninth Circuit because of its failure to apply the proper pleading standard for claims alleging breach of the duty of prudence against fiduciaries who manage employee stock ownership plans (ESOPs). The Supreme Court’s opinion sets forth a specific, stringent pleading standard for such claims – though questions remain as to how strictly lower courts will interpret that standard. The opinion also shows that it will be strategically advantageous for defendants to attack claims against ESOP fiduciaries at the pleading stage.

Employee Stock Ownership Plans: Innovative and Tax-Efficient Tools to Meet Business Planning Needs

You may have heard of them, but may not fully appreciate or understand how an Employee Stock Ownership Plan or “ESOP” could help you meet your business planning goals.

Incentive or Gift? How Perception of Employee Stock Options Affects Performance

The basic theory of why companies issue stock options to their employees is fairly simple: The more that a firm's stock price increases, the greater the profit from exercising those options, creating what employers hope is a valuable incentive that will motivate employees to focus on making the company more successful and more profitable.
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