Employee Stock Ownership Plans (ESOP) come in a variety of programs. Lingo and terminology for these programs can be a little complex. Instead of trying to explain and give examples of them all (which might make this topic even more overwhelming), we thought we would share a simple timeline of our own plan. We believe being an ESOP company is an outstanding benefit for our company and will help us provide even better service to our clients and candidates as the years progress. But how does all of this work? How do our employees participate in our plan? Here’s how:
Once individuals have been a full–time Palmer Group employee for a year, they are eligible to participate in our 401k and ESOP plan. Employees start receiving company shares annually. At this point, those shares are only partially vested (partially owned). With each passing year, the percentage of vested shares increases by 20% until employees are 100% (at six years).
Companies often have a match program to accompany their 401k plan. For example, if you invest 3% of your income in your 401k, your company may match that amount. At Palmer Group, we have safe harbor matches. This means our company provides a match to employees’ 401k contribution, but that match is presented in company shares.
Our shares are distributed on December 31st of each year. Approximately 97,000 shares are dispersed among the current shareholders. This practice will continue until all shares are released in 2036. The shares of individuals no longer with the company will also be redistributed to the current employees.
Throughout the year, our company data is gathered and sent to financial advisors who perform business valuation and marketplace analysis. The combination of this information is used to compile our share price each year. Then each spring, we update our employees on our share price and give them their yearly ESOP statements.
When employees have participated in our ESOP plan for six complete years, they become 100% vested in their company shares. This simply means they own 100% of their shares. By reaching this milestone, our employees are given stronger financial security for their retirement and other future plans.
The plan is a long-term investment for our people. The more we grow in understanding the impact and benefits this plan has, the greater we can serve the professionals we work with on a daily basis. Palmer Group is truly grateful to offer this benefit to our employees. If you have further questions on this topic, please connect with our staff today. We would be more than happy to answer your questions or assist your employment needs.
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