Following a 100% leveraged ESOP transaction, the landscape may include an individual owner(s) no longer involved in the business or former owner(s) remaining with the company in key management roles. In any model or variation on the theme, and regardless of prior board composition, there are new priorities. These include independent governance, fiduciary compliance, long-term sustainability and financial performance, and a shift in cultural alignment built on a new foundation of employee ownership. How is a new board formed, what is the optimum composition, how are key governance principles and goals built into the infrastructure, what is the relationship between the board, management and the ESOP trustee, what are the key challenges and risks for a new board, and how can a new board combine an appropriate level of transparency with employee-owners considering the confidentiality of certain board duties and governance?
We will take on all these questions. After an introductory presentation of the key elements of building an ESOP board, attendees will break out into two discussion groups. The first group will be focused on building a board from scratch. Attendees will discuss boards formed post-ESOP transaction at organizations where a board may have existed in name only and their performance to date, including achievements and how it was done. They will also share take-aways from the presentation and have attendees leave with ideas to take back to employee-shareholders on board performance in their own firms. The second group will focus on post-ESOP boards that general meet governance and employee-shareholder expectations but still fall short in some "best in class" practices. This group will discuss practical steps to improve a supportive ESOP culture.
An in-process Survey Monkey (or comparable active response platform) may be used during the presentation and before any breakout groups to identify breakout dynamics or key findings among the attendees.
Create a framework for best practices in building a board of directors and a governance infrastructure after a 100% leveraged ESOP transaction.
Identify where your ESOP's board of directors generally performs within the framework of those best practices.
Outline objectives for the ESOP board to work toward compliance with best practices, including interactions with the trustee and employee-shareholders. Require an annual review with input from all stakeholders to measure performance against objectives.
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