WQLF SAYS; HAVE MERCY WQLF ahoooooo
Dr. Joong J Fang Said
"A public company frees up shares for an Employee Stock Ownership Plan (ESOP) for tax benefits, to reward/motivate employees, create a market for shares, or even to finance acquisitions, and yes, these shares can be used defensively (to fight takeovers) or offensively (to acquire other companies), acting as a strong internal defense against hostile takeovers by spreading ownership widely, notes the National Center for Employee Ownership (NCEO) and scholarly articles and other sources.
Why Companies Use ESOPs for Share Release
Tax Advantages: Companies get tax deductions for contributions to the ESOP, which can be used to repay loans or directly fund share purchases, reducing taxable income.
Employee Motivation & Retention: Offers employees a stake in the company, aligning interests and boosting performance, especially in growth-focused sectors like tech.
Succession Planning: Creates a ready market for major shareholders (like founders) to sell shares, often with tax benefits, ensuring business continuity.
Capital & Liquidity: The ESOP can borrow money to buy shares, with the company making deductible payments, or the company can issue new shares as compensation, providing capital.
ESOPs & Takeovers (Defense & Offense)
Defense (Poison Pill): Spreading a large chunk of stock into employee hands through an ESOP makes it harder for outside entities to gain a controlling interest, acting as a "poison pill" against hostile takeovers, as explained in this scholarly article.
Offense (Acquisitions): An ESOP trust can borrow money (a leveraged buyout) to buy other companies, using its unique ability to take on debt, making the ESOP an active participant in M&A, notes UNI ScholarWorks and ESOP.org.
How Shares Are Released
New Shares: The company issues new shares (diluting existing stock) or uses treasury shares (already held by the company) to fund the ESOP.
Contribution Deductions: The company can deduct the fair market value of the contributed shares (or cash used to buy them) from its taxable income, up to certain limits, according to NCEO.org and The Menke Group "
Message in reply to: TALIBAN MAN SAID;
It’s times like this when the winners leave the losers in the dust. I’d really like to see some internal changes made. Even though this is a public company, as far as I’m concerned they’re private because they control the preferred vote, plus the annual 34M share incentive plan. Until those are removed, this stock is going nowhere IMO
Bullish
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