– my company is now 100% employee owned. What does that mean for the employees?


– my company is now 100% employee owned. What does that mean for the employees?

In: Economics

Basically the profits will go to the employees, not to shareholders. Most employee owned businesses I’m aware of pay out a bonus check every year to everyone based on their hours and how long they’ve worked there. They are more likely to promote from within, things like that that are more employee focused.

It means that the all the company shares are owned by employees of the company. Any other implications would require more details about the company, but it’s likely that the company uses a profit-sharing model to return the company value to it’s share holders. So the profits of the company are paid out to the shareholders. This would be no different than any other company that does this, except the shareholders in this case would also all be employees.

Do you work for Taylor Guitars?

The company i work for is employee owned. Each employee becomes vested in company stock after 3 years. We also get bonuses depending on quarterly performance. Lots of other cool benefits. For private insurance its not a bad price and covers a lot. We also have deals with other local businesses to give us discounts on certain services. 15 percent off Verizon. 20 percent off a Y membership. Stuff like that.

It sounds like you are in an 100% ESOP. This is essentially a retirement plan. Company allots you shares every year of employment, typically based on your percentage of the overall company salary, times the number of shares being distributed.

I.e say you make $50k/ year and the total company payroll is $5million. And they are distributing 1,000 shares. Your 50k/ 5 million * 1,000 = 0.01 * 1,000 = 10 shares.

Every year as your pay goes up, you would get slightly more shares, and the longer you stay at that company, the more shares you will earn. when you leave or retire or are cashed out (usually cash outs start at 60 years old), then you will be paid out for the number of shares at their current value.

This is great for employees as it gives you a stake in the company and money for retirement/when you leave. It is great for the company as employees tend to stay longer (less turnover means less training/onboarding) and there are tax benefits for employee owned companies (in the states at least).

TLDR: the longer you stay, the more shares you will earn. The better your company does, the higher the share value goes. Enjoy the extra potential retirement bonus!

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