Employee Stock Ownership Plan
What is an ESOP?
General Overview
An Employee Stock Ownership Plan (ESOP) is an employee benefit plan which makes the employees of a company owners of stock in that company. Several features make ESOPs unique as compared to other employee benefit plans. First, only an ESOP is required by law to invest primarily in the securities of the sponsoring employer. Second, an ESOP is unique among qualified employee benefit plans in its ability to borrow money. As a result, "leveraged ESOPs" may be used as a technique of corporate finance.
How Do ESOPs Work?A company which wants to set up an ESOP creates a trust to which it makes annual contributions. These contributions are allocated to individual employee accounts within the trust. A number of different formulas may be used for allocation. The most common is allocation in proportion to compensation, but formulas allocating stock according to years of service, some combination of compensation and years of service, and equally, have all been used. Typically employees might join the plan and begin receiving allocations after completing one year of service with the company, where any year in which an employee works at least 1000 hours is counted as a year of service.
The shares of company stock and other plan assets allocated to employees' accounts must vest before employees are entitled to receive them. Vesting is a process whereby employees become entitled to an increasing percentage of their accounts over time. The least liberal vesting schedule allowed by law 20% per year until employees are fully vested after 7 years of service. Some companies, however, vest employees entire accounts right away.
When an ESOP employee who has at least ten years of participation in the ESOP reaches age 55, he or she must be given the option of diversifying his/her ESOP account up to 25% of the value. This option continues until age sixty, at which time the employee has a one-time option to diversify up to 50% of his/her account. This requirement is applicable to ESOP shares allocated to employee's accounts after December 31, 1986.
Employees receive the vested portion of their accounts at either termination, disability%2
Sunday, April 24, 2005
Carly Fiorina - My Leader
I must say that it is a special moment for me to get an award that is named after Dave Packard and to be compared in any way to him. He has been such a great example to so many people in so many parts of the world for so many decades, and he has been a great example to me as well.
One of the things that has always inspired me, is to remember that HP needs to be a company in the 21st century that Dave would be proud of, and that Dave intended, I think, always for Hewlett-Packard to be a leader.
There are lots of things that have changed since Dave Packard was at HP. One of the things, of course, that has changed, is that we are a bigger company with greater capability. Today, we are an $80 billion company, operating in 178 countries with 145,000 employees. And I want to say as well that I am here on behalf of those 145,000 companies who, with their dedication and their effort every day, make HP what it is.
But I think there are some things that don't change, and one of the things that I think doesn't change is what leadership is all about - whether you are talking about the leadership of a company, or the leadership of an organization, or indeed, even the leadership that this organization represents. I think that leadership is defined by capability certainly, but also by character and increasingly by collaboration.
Capability is all about what we can do, and of course, much of the transformation that HP has been going through over the last five years has been about building our capability so that we can do more in an age that is different from the age that came before it. Character is all about how we do things - what we stand for, what we believe in, how we show up, what our values are. And today, the values of the Hewlett-Packard Company are precisely the same values that have guided this company for 60 years, with one important addition: speed and agility, because in the 21st century both matter.
Collaboration: I want to spend most of my time tonight talking about collaboration because I think it is what this organization is all about, and I think because of the nature of the changes that are going on in the world today, collaboration is particularly important. Of course, we talk about collaboration inside HP with customers, so that we are making a real contribution. We talk about collaboration with communities to make a positive difference in people's lives. And BENS is all about collaboration between business and government for the purposes of both prosperity and security.
Why is collaboration today more important than ever? And increasingly, we're talking not just about collaboration between traditional customers and suppliers or employees, but we're talking about collaboration around the world, between industries, certainly between government and industry, between academia, government and industry.
First, I think it is more important perhaps for business executives to collaborate now than at any time in history, because I do believe that global companies are today in a position to be a bridge between cultures and competing interests. I look around this room and I see businesspeople who are truly engaged every day in every market in every corner of the world, and it makes me think that in some ways, we are therefore in a unique time in human history. It is unique in many ways, but in this particular way, it is unique because business leaders today have as much first-hand experience in international affairs as our political leaders - perhaps more. Global companies today as well represent 38 of the top 50 GDPs in the world.
I think secondly, collaboration is more important than ever before because of the changes that we are facing. John referenced this in his remarks, but as someone who studied history, I remind myself that in fact we only have 10 years' experience with a truly global economy.
In the millennia of human experience, we have 10 years of experience with a truly global economy, because it was 10 years ago that 10 billion new people joined the global economy. And as well, this is a different era because now we have entered a time in which all analog content and every physical process will become digital, and mobile, and virtual, and personal. Digital is a word we all understand; mobile, you can do anything anywhere; virtual in the sense that people can have the same experience apart that they can have together; and personal in the sense that the individual - whether they are acting as a consumer, a citizen or a businessperson - the individual is increasingly in charge.
If you doubt this transformation from physical and analog to digital, mobile, virtual, personal, pick your favorite example. One of ours happens to be photography - from physical to digital, mobile, virtual, personal. If you're an iPod fan, pick music. If you've experienced the evolving set of e-government, think about being a citizen. And of course, everyone here is focused on security, and we know the challenges as well as the solutions that digital, mobile, virtual, personal technologies bring to our security.
In every industry, whether it is military, healthcare, education, entertainment - in any industry and in every industry, this transformation is now beginning. And so, what this new digital, mobile, virtual, personal age is bringing about is the complete democratization of information; the removal of traditional barriers of time and distance and wealth - not right away, but over time, and the onset of complete transparency.
So what does it mean for governments like China, when 80 million citizens are online and many millions more in the decades to come? What does it mean for news organizations when bloggers are as likely to break a story as a big anchor? What does it mean for this democracy when millions of consumers today can vote for their choice of American Idol online or on their cell phones, and how long will it take before they demand that they vote for President in the same way? And of course most relevant tonight, what does it mean for our security? We can all come up with many horror scenarios, but what will it mean when the Internet goes broadband, and video is not limited by location or access to electricity? What happens when the digital revolution gets married with nanotechnology or biotechnology, shrinking smart bombs and biological weapons from the size of a suitcase to the size of a thimble? And, of course, you also have significant opportunities to collect, to communicate, to analyze and to act on intelligence to prevent all of those horror scenarios.
Now, I could tell you about some wonderfully interesting things that we are doing in the technology field as part of the $4 billion a year that we spend on R&D, and the 11 patents we produce every day. I could tell you about some of the great services we have around active countermeasures, but given the lateness of the evening, as well as the fact that everyone is dying to go out and watch the reruns of the Sox and the Yankees, I will not - other than to say that none of the solutions that we must find together - whether those solutions are to our national security issues, whether those are in response to the threats to our national leadership (we all know it is why we are here and part of this great organization), we all know that none of those solutions will occur without of course, capability - certainly without character, because a tool is only as good as the wisdom of those who wield that tool, but most importantly of all, without collaboration.
You know, as mentioned in the Secretary's extremely generous introduction, that I've studied history, and there are a couple things that history tells us. One thing that history teaches us is that for every generation, from ancient times until today, progress and destruction have traveled down the same road. In the Mediterranean world of the 12th century B.C., the same shipping lanes that brought prosperity also brought violence from raiders. During the Middle Ages, the same roads that saw record commerce travel from town to town also carried the bubonic plague.
And so it is the course of history that says the same great tools that the information age, that the digital, mobile, virtual, personal age bring also bring the seeds of destruction. It is equally true, however, that at no point in history have the forces of destruction overcome the forces of progress. It is clear that our security is threatened in unprecedented ways in this new digital, mobile, virtual, personal age. It is also clear - and this is in fact why I left the study of history to go into the field of technology -it is equally clear that the tools of this age, the tools that democratize information, the tools that permit individuals to be in charge, that these tools of this age are the most powerful tools ever devised. And powerful tools can be wielded for good purpose and meaningful contribution, as surely as they can be wielded for evil and destruction.
Tonight, we celebrate, I believe, a great organization that has focused always on leadership through collaboration; that has focused always on remembering that leadership is about character, as surely as it is about capability. And I think as we celebrate this great organization tonight and all that it has contributed, and as we contemplate together the collaboration that will be required to meet both the challenges and the opportunities of the 21st century, it is worthwhile also to remember that making history - that's one other thing the study of history has taught me: history does not happen; history is made by people who choose to make it, sometimes in small ways, sometimes in large ways - but history is made when people have the right balance of realism and optimism.
We must be realistic that we face unprecedented challenges - unprecedented challenges to our leadership, unprecedented challenges to our security and our way of life. But I think we have so many reasons to be optimistic, so many reasons to remind ourselves that over and over, people demonstrate that more can be done than was thought possible with less than was thought to be necessary. And I think this organization is a great example of that. For those of you who sometimes follow HP, you may know that we sometimes use a phrase, "Everything is Possible." I actually believe that. I do believe that not everything is easy, not everything happens right away, nothing good happens without teamwork and collaboration guided by both capability and character, but when people collaborate together well, guided by a worthy purpose, everything is possible. Thank you very much for the leadership of this organization and for your honor tonight.
Thx
Danageri
One of the things that has always inspired me, is to remember that HP needs to be a company in the 21st century that Dave would be proud of, and that Dave intended, I think, always for Hewlett-Packard to be a leader.
There are lots of things that have changed since Dave Packard was at HP. One of the things, of course, that has changed, is that we are a bigger company with greater capability. Today, we are an $80 billion company, operating in 178 countries with 145,000 employees. And I want to say as well that I am here on behalf of those 145,000 companies who, with their dedication and their effort every day, make HP what it is.
But I think there are some things that don't change, and one of the things that I think doesn't change is what leadership is all about - whether you are talking about the leadership of a company, or the leadership of an organization, or indeed, even the leadership that this organization represents. I think that leadership is defined by capability certainly, but also by character and increasingly by collaboration.
Capability is all about what we can do, and of course, much of the transformation that HP has been going through over the last five years has been about building our capability so that we can do more in an age that is different from the age that came before it. Character is all about how we do things - what we stand for, what we believe in, how we show up, what our values are. And today, the values of the Hewlett-Packard Company are precisely the same values that have guided this company for 60 years, with one important addition: speed and agility, because in the 21st century both matter.
Collaboration: I want to spend most of my time tonight talking about collaboration because I think it is what this organization is all about, and I think because of the nature of the changes that are going on in the world today, collaboration is particularly important. Of course, we talk about collaboration inside HP with customers, so that we are making a real contribution. We talk about collaboration with communities to make a positive difference in people's lives. And BENS is all about collaboration between business and government for the purposes of both prosperity and security.
Why is collaboration today more important than ever? And increasingly, we're talking not just about collaboration between traditional customers and suppliers or employees, but we're talking about collaboration around the world, between industries, certainly between government and industry, between academia, government and industry.
First, I think it is more important perhaps for business executives to collaborate now than at any time in history, because I do believe that global companies are today in a position to be a bridge between cultures and competing interests. I look around this room and I see businesspeople who are truly engaged every day in every market in every corner of the world, and it makes me think that in some ways, we are therefore in a unique time in human history. It is unique in many ways, but in this particular way, it is unique because business leaders today have as much first-hand experience in international affairs as our political leaders - perhaps more. Global companies today as well represent 38 of the top 50 GDPs in the world.
I think secondly, collaboration is more important than ever before because of the changes that we are facing. John referenced this in his remarks, but as someone who studied history, I remind myself that in fact we only have 10 years' experience with a truly global economy.
In the millennia of human experience, we have 10 years of experience with a truly global economy, because it was 10 years ago that 10 billion new people joined the global economy. And as well, this is a different era because now we have entered a time in which all analog content and every physical process will become digital, and mobile, and virtual, and personal. Digital is a word we all understand; mobile, you can do anything anywhere; virtual in the sense that people can have the same experience apart that they can have together; and personal in the sense that the individual - whether they are acting as a consumer, a citizen or a businessperson - the individual is increasingly in charge.
If you doubt this transformation from physical and analog to digital, mobile, virtual, personal, pick your favorite example. One of ours happens to be photography - from physical to digital, mobile, virtual, personal. If you're an iPod fan, pick music. If you've experienced the evolving set of e-government, think about being a citizen. And of course, everyone here is focused on security, and we know the challenges as well as the solutions that digital, mobile, virtual, personal technologies bring to our security.
In every industry, whether it is military, healthcare, education, entertainment - in any industry and in every industry, this transformation is now beginning. And so, what this new digital, mobile, virtual, personal age is bringing about is the complete democratization of information; the removal of traditional barriers of time and distance and wealth - not right away, but over time, and the onset of complete transparency.
So what does it mean for governments like China, when 80 million citizens are online and many millions more in the decades to come? What does it mean for news organizations when bloggers are as likely to break a story as a big anchor? What does it mean for this democracy when millions of consumers today can vote for their choice of American Idol online or on their cell phones, and how long will it take before they demand that they vote for President in the same way? And of course most relevant tonight, what does it mean for our security? We can all come up with many horror scenarios, but what will it mean when the Internet goes broadband, and video is not limited by location or access to electricity? What happens when the digital revolution gets married with nanotechnology or biotechnology, shrinking smart bombs and biological weapons from the size of a suitcase to the size of a thimble? And, of course, you also have significant opportunities to collect, to communicate, to analyze and to act on intelligence to prevent all of those horror scenarios.
Now, I could tell you about some wonderfully interesting things that we are doing in the technology field as part of the $4 billion a year that we spend on R&D, and the 11 patents we produce every day. I could tell you about some of the great services we have around active countermeasures, but given the lateness of the evening, as well as the fact that everyone is dying to go out and watch the reruns of the Sox and the Yankees, I will not - other than to say that none of the solutions that we must find together - whether those solutions are to our national security issues, whether those are in response to the threats to our national leadership (we all know it is why we are here and part of this great organization), we all know that none of those solutions will occur without of course, capability - certainly without character, because a tool is only as good as the wisdom of those who wield that tool, but most importantly of all, without collaboration.
You know, as mentioned in the Secretary's extremely generous introduction, that I've studied history, and there are a couple things that history tells us. One thing that history teaches us is that for every generation, from ancient times until today, progress and destruction have traveled down the same road. In the Mediterranean world of the 12th century B.C., the same shipping lanes that brought prosperity also brought violence from raiders. During the Middle Ages, the same roads that saw record commerce travel from town to town also carried the bubonic plague.
And so it is the course of history that says the same great tools that the information age, that the digital, mobile, virtual, personal age bring also bring the seeds of destruction. It is equally true, however, that at no point in history have the forces of destruction overcome the forces of progress. It is clear that our security is threatened in unprecedented ways in this new digital, mobile, virtual, personal age. It is also clear - and this is in fact why I left the study of history to go into the field of technology -it is equally clear that the tools of this age, the tools that democratize information, the tools that permit individuals to be in charge, that these tools of this age are the most powerful tools ever devised. And powerful tools can be wielded for good purpose and meaningful contribution, as surely as they can be wielded for evil and destruction.
Tonight, we celebrate, I believe, a great organization that has focused always on leadership through collaboration; that has focused always on remembering that leadership is about character, as surely as it is about capability. And I think as we celebrate this great organization tonight and all that it has contributed, and as we contemplate together the collaboration that will be required to meet both the challenges and the opportunities of the 21st century, it is worthwhile also to remember that making history - that's one other thing the study of history has taught me: history does not happen; history is made by people who choose to make it, sometimes in small ways, sometimes in large ways - but history is made when people have the right balance of realism and optimism.
We must be realistic that we face unprecedented challenges - unprecedented challenges to our leadership, unprecedented challenges to our security and our way of life. But I think we have so many reasons to be optimistic, so many reasons to remind ourselves that over and over, people demonstrate that more can be done than was thought possible with less than was thought to be necessary. And I think this organization is a great example of that. For those of you who sometimes follow HP, you may know that we sometimes use a phrase, "Everything is Possible." I actually believe that. I do believe that not everything is easy, not everything happens right away, nothing good happens without teamwork and collaboration guided by both capability and character, but when people collaborate together well, guided by a worthy purpose, everything is possible. Thank you very much for the leadership of this organization and for your honor tonight.
Thx
Danageri
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