Learn about employee ownership options
Broad-based employee ownership sustains quality jobs, creates stronger businesses, and preserves your company’s legacy. Project Equity can help you choose the form that is the best fit for you and your business.
Worker cooperatives and ESOPs have been around for decades. Worker-owned cooperatives are 100% employee-owned, and have democratic practices such as majority board representation built in to the model. ESOPs (Employee Stock Ownership Plans) can be fully or partially employee-owned, and Democratic ESOPs integrate employee voting and board representation.
A worker-owned cooperative (or worker coop) is a company that is owned and controlled by the people who work there. The Board of Directors is made up by a majority of worker-owners who are elected by the full membership on a one-person, one-vote basis, and profits are shared based on hours worked. Their hallmarks are a highly participatory culture with most having traditional management structures and ‘representative’ democracy through the Board and the Annual General Meeting.
ESOPs are retirement plans that hold all or a portion of the company’s shares in a trust on behalf of the employees. The benefits of employee ownership that research has demonstrated—improved company performance and employee wellbeing—require participatory culture and are deepened by 100% employee ownership. Democratic ESOPs build this into the business structure by incorporating employee participation in electing Plan Trustees, on Trustee Committees, or on the Board of Directors.
|Worker cooperative||Democratic ESOP|
|Broad-based employee ownership||✔||✔|
|Built in profit sharing||✔||Recommended|
|100% employee ownership||✔||Recommended|
|Employee stock value appreciates, redeemable upon retirement||✔|
|Potential tax breaks||✔||✔|
|Annual valuation required (ERISA / DOL regulated)||✔|
|Suitable for large companies||✔||✔|
|Suitable for small companies||✔|