For Executives
Serving on an ESOP Board
What experienced executives should know about board service at employee-owned companies.
Serving on an ESOP board means overseeing a company owned wholly or partly for the benefit of its employees. Directors perform the normal responsibilities of any board member — strategy, oversight of management, risk and succession — while working within the ESOP structure.
Do you need ESOP experience?
No. Prior ESOP experience is valuable but not required. Read Do ESOP Directors Need Prior ESOP Experience?
What to learn about an ESOP company
- How the trustee is structured and how directors are elected
- The annual valuation process and what drives value
- The repurchase obligation and funding plan
- Outstanding transaction debt, seller notes or warrants
- The company's ownership culture and participant communication
Questions to ask before joining
- Why is the board adding an independent director now, and what is expected of me?
- How does the board interact with the trustee?
- What is the time commitment, and how are directors compensated?
- What D&O insurance and indemnification are in place?
- What decisions will the board face in the next few years?
Interested in Serving on an ESOP Board?
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