Employee Ownership

What does Employee Ownership mean?

Employee ownership refers to the ownership of a company, directly or indirectly, by some or all the employees in a company. Ownership would be granted through a formal plan offered by the employer. Around 9 million U.S employees hold stock options in the companies they work at and near 11 million participate in stock purchase plan.

What are restricted stock shares?

Restricted stock plans grant or sell employees stock that they can possess only once certain restrictions (such as vesting) are met. You can provide vesting conditions that need to be met prior to the shares being vested. If an employee does not meet those vesting terms or leaves the company before the terms are met, then the employer has the option of buying back all unvested stocks.

What are the benefits of restricted stocks?

There are many benefits to restricted stocks. First and foremost, they enhance the company’s ability to recruit and retain talented employees. They may be granted to specific employees in different amounts and subject to different terms and conditions. Furthermore, as previously mentioned above, if the recipient fails to satisfy the vesting conditions, the company has the right to repurchase any unvested (unearned) restricted shares at a price equal to the shares initial cost to the recipient. The company also receives a tax deduction equal to the compensation income recognized by employees

Benefits of Employee Ownership?

When holding restricted stocks of the company, an employee has a personal interest in seeing that their work benefits the company, which in turn results in greater job satisfaction. Which is why companies with employee ownership often see greater productivity, higher profitability, and increased revenue. These successes also tend to continue over time, as the motivation of employees continue as long as they have an interest in the overall health of the company.

One way executives consider employee ownership is that their employee benefit program is part of their human resource and business strategies. The design of the programs can assist the company with achieving business objectives. Studies have shown the Employee Ownership programs improve the well-being of workers; creates greater participation in decision making; Creates higher pay, benefits and wealth; leads to greater job security and satisfaction; and increases trust in the firm and management.

An issue that many business owners have is that the majority of their wealth is tied up in their business. Selling portions of the stocks in the company can generate the cash needed to allow for diversification.

How does Transcheck Capital help?

First, Transcheck Capital will send you a form to fill giving us some information about the company to determine the needs of the company and any additional steps that will need to be taken. Then, follow-up meeting will be held to discuss the details of services needed and being provided and a full scope of action. An information letter describing the offer to employees will be sent out along with an agreement letter stating terms and conditions for them to sign. For the employees that accept the offer we will give an IRS form for them to send to IRS to claim the additional “income”. Finally, We will have a presentation for the employees to answer any further questions they may have and help them understand how they will be filing their tax return along with section 83(b) option.

To start your process for Employee Ownership email us at Alice@TranscheckCapital.com and we will be happy to help.

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