This article first appeared in The ESOP Association's January 2025 edition of The ESOP Report. It is co-written by Lindsay Shafer and Jennie Msall from Ventura Trust.

‍Building Employee Understanding of the Trustee’s Role

A particularly unique thing about ESOP-owned companies is that the trustee is the shareholder of record for the corporation, not the ESOP participants, who are beneficial owners. The trustee is a critical player, but the concept of a trustee can be confusing and unfamiliar to employee-owners. At most ESOP-owned companies, a small group of employees, such as the CEO and CFO, regularly interact with the trustee through their functional roles, but otherwise employees don’t naturally interact with or get to know the trustee in the normal course of business. However, building employee understanding of the trustee’s role and creating opportunities for employees to get to know their trustee can help build and strengthen your ownership culture.

In particular, building a connection to the ESOP trustee:

• Increases transparency – participants learn more about the implementation of the ESOP, including the role of the trustee as a buyer of company stock on their behalf
• Increases trust – participants learn that the trustee has a fiduciary obligation to them and their interests, and in particular ensures that the ESOP transaction was negotiated fairly and with expertise
• Increases understanding of the ESOP structure overall, including what it means that the shares are held in a trust, that participants are beneficial owners, and the annual lifecycle of the ESOP
• Increases understanding of how the share price is determined through the annual valuation update, including the role of the trustee and their financial advisor

To continue reading, open the pdf on TEA's website and scroll to page 26.