ESOP trustees are selected by the Board of Directors. Watch our video to learn more about how to choose your ESOP trustees.
The law requires the board to be responsible for the prudent selection, monitoring, removal, and ultimately, replacement of the trustees. The board can select insiders, such as directors, officers, management, and employees, or it can appoint an outside, independent trustee such as a bank or another professional who specializes in this type of work.
Whether you select to use employees and insiders or outside professionals as trustees, there are a variety of factors to base your decision on including the complexity of the transactions involved and the transactional situation you may be involved in. Through all of that analysis, one has to bear in mind that selling shareholders should never serve as trustees because of the unavoidable conflicts of interest they present.