Private Companies – Employee Share Ownership ESOP, ESPP & S-corporation
Private Companies – Employee Share Ownership ESOP is not just for public companies and pre-IPOs. Private and permanently private companies can benefit from them too. Some of the largest companies in the world are private (Dell, Mars, Cargill, Publix).
Employee Share Ownership distribution can vary in a privately held firm can, depending on the plan type and whether the ESOP sponsor is an S corporation, or all or substantially all is owned by the ESOP with rules that only allow company stock to be owned by employees.
A privately held company including an S corporation may make the distribution in stock or it must give the employees an option on the stock for up to 60 days. The employee may sell of there may be a second 60 day option window. After this the company may have no further obligation to repurchase the shares.
Private Companies – Employee Stock Ownership ESOP
Employee stock ownership and executive compensation is fast becoming a critical component in the private company equity space for attracting and retaining a top class employee base.
Whether the company is a leading start-up, a permanently private company or pre-IPO, equity compensation is one of the most progressive methods in rewarding their key employees. Companies use Initial Public Offering (IPO) pay-outs to engage and incentivize their workforce.
Other popular methods are quarterly redemption window facilities, whereby the company buys back their employee shares at the latest valuation price.
Stock as Compensation
Private companies offering employee equity and stock option plans require a refined solution for managing complex plans equity and their stock ownership levels, which are often very complex due to multiple rounds of investment at different valuations.
The Global Shares stock option software suite for private companies meets and surpasses these needs. Our track record of working and designing equity compensation software for the largest private companies in the world puts us at the forefront of equity software and equity administration for private companies.