Equity Compensation, Employee Stock Ownership, and Profits Sharing: Not at All Created Equally
Employee ownership has increasingly been in the news and is often pitched as a perk of joining a startup. In 2016, we applauded Chobani's grant of equity to employees, potentially worth six figures each. Chobani is just one of thousands U.S. companies doing this. We expect to see more and more corporations sharing ownership as a practical solution to issues of owner retirement and economic inequality.
Before adopting a program it's essential to understand the many options and varying tax implications for both companies and employees.
We also know a lot about Cooperative Associations.
We currently represent co-ops in transportation, privacy, advertising, utility, arts, farming, grocery, manufacturing, and retail businesses.
A cooperative is a corporation or association organized for the purpose of providing economic services, without gain to itself, to shareholders or members who own and control it.
Co-ops have a rich history in US utility and farming industries because they make excellent vehicles for leveraging group purchase power. A cooperative may be formed for many purposes, including acquiring, producing, building, operating, manufacturing, or distributing any type of goods, or services.
Cooperatives typically operate on a for-profit basis with profits distributed to members based on their participation and how distributions are defined in the association's bylaws.
Cooperatives are generally distinguishable from other business structures by the features of democratic control and voting.
ESOP: Employee Stock Ownership Programs
Employee-owed businesses can also be structured under an ESOP program that receives special tax benefits. These programs help business founders retire while passing the business on to its employees. We are happy to work with you to design the right model for your business.
In partnership with the Sustainable Economies Law Center,
we published a full analysis of the
Texas Cooperative Association Act,
Chapter 251 of the Texas Business Organizations Code.
You can access the Texas White Paper for free, Here.
We're happy to send you a copy of either paper. Just send us an email to request it.