ABRC-ESOP

This post was published to ABRC-ESOP at 12:34:53 PM 3/7/2007
The Role of The Board in an ESOP


One of the most common problems we see in smaller S. Corp. ESOPs is the lack of understanding of traditional corporate structure, in particular, the role of the Board of Directors. In most small corporations, the owners wear multiple hats and fulfill multiple roles. They are the Shareholder, the Chairman of the Board or a Board Member, and often the President of the corporation.
Who are the Board of Directors?
The Board of Directors (Board) is the highest governing body in a company. They sit between the shareholders and the CEO/President by representing the shareholders. The Board ensures the company is run in a prudent manner in the best interest of shareholders as a whole. The Employee Stock Ownership Plan (ESOP) does not have a direct relationship with management and is the only shareholder in a 100% owned the ESOP. The ESOP does not have a direct relationship with management and votes the ESOP shares elect Board members and other shareholder ballot measures.