Opinion ID: 1478250
Heading Depth: 2
Heading Rank: 4

Heading: The Employee Stock Ownership Plan (ESOP)

Text: In November 1975 the Corporation established an ESOP designed to hold Class B non-voting stock for the benefit of eligible employees of the Corporation. The ESOP is a tax-qualified profit-sharing plan whereby employees of the Corporation are allocated a share of the assets held by the plan in proportion to their annual compensation, subject to certain vesting requirements. The ESOP is funded by annual cash contributions from the Corporation. Under the plan, terminating and retiring employees are entitled to receive their interest in the ESOP by taking Class B stock or cash in lieu of stock. It appears from the record that most terminating employees and retirees elect to receive cash in lieu of stock. The Corporation commissions an annual appraisal of the Corporation to determine the value of its stock for ESOP purposes. Thus, the ESOP provides employee Class B stockholders with a substantial measure of liquidity not available to non-employee stockholders. The Corporation had the option of repurchasing Class A stock from the employees upon their retirement or death. The estates of the employee stockholders did not have a corresponding right to put the stock to the Corporation.