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