What is an ESOP?
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Each employee at each Alliance Holdings portfolio company becomes a member of the Alliance Holdings ESOP. We believe that the value of employee ownership can be maximized through the use of a diversified holding company, rather than individual operating companies. The Alliance ESOP is a no-cost, incremental retirement benefit.
An Employee Stock Ownership Plan (“ESOP”) is a "qualified employee retirement plan" that invests primarily in “employee securities.” Because an ESOP is a "qualified" retirement plan, it must satisfy the discrimination, participation, vesting, distribution and other requirements of the Internal Revenue Code of 1986 (“IRC”) and the Employee Retirement Income Security Act of 1974 (“ERISA”). Each employee owns a share of Alliance Holdings, a diversified ESOP with many distinct companies. We believe that the value of employee ownership can be maximized through the use of a diversified holding company structure, rather than individual operating companies. An ESOP has two components: (i) the plan document itself, which sets forth in writing the terms of the ESOP, and (ii) the trust agreement, which sets forth in writing the powers, duties and other rights and responsibilities of the trustee of the ESOP participants. Corporate officers of the sponsoring company often serve as the trustees. The sponsoring company may, however, appoint a corporate trustee. ESOPs, like all tax-qualified retirement plans, must meet certain minimum requirements set forth in the IRC. The ESOP must provide a trust which will hold all of the assets of the plan. The ESOP must operate for the exclusive benefit of participants and their beneficiaries. The sponsor must intend the plan as a permanent plan (although it may terminate the plan at any time for a valid business reason) and it must intend to have the trust's assets and income distributed to the plan participants and their beneficiaries. The plan must cover at least 50 employees or 40% of the company's employees, whatever is less. |