4 ms·

ah there we go, ESOP. Not to be mistaken with a cooperative.

• satya71 8y ago
  New Belgium is also owned by employees via ESOP. What is the practical difference between ESOP ownership and cooperative?
  • Alex3917 8y ago
    An ESOP is used to allow the owners to sell their stock to employees. The owners benefit by getting a tax break, and the employees benefit because they're allowed to pay for the stock out of the future earnings of the company rather than needing to pay out of pocket. Most co-ops are formed using ESOPs, but not every company that does an ESOP becomes a co-op. For example, a company could just sell 20% of its stock to its employees but still remain largely owner controlled. Even if you start a company knowing you want it to be a co-op, the best practice is currently just make it a C Corp and keep it that way until it's profitable and stable and no longer growing quickly. Unfortunately there currently aren't really good ways to finance co-ops, so creating a traditional company and then later converting it via an ESOP seems to be the recommended practice. I think there are some people working on better alternatives, but I don't follow the space super closely.
    • C1sc0cat 8y ago
      Normally the way it works (in uk terms) the coop X owns the company Y who employs workers - who when they become members of coop Y own the ecompany. It gets complex but membership in a coop and being an employee of the company the coop owns are two separate but interlinked things. When I was a member of Poptel we had a 4 page document that explained how it worked :-)