I have a client who is looking for a institutional trustee for its ESOP. The company is closely-held with approximately 140 participants in the ESOP. Currently, the president of the company is acting as trustee. The ESOP is not leveraged (though it was leveraged in the past - the loan has been repaid). There are approximately 100 participants.

If anyone has any recommendations, please let me know. We have some preference for a southeastern-based trustee, though this is not a requirement.

Check with The ESOP Association (www.esopassociation.org) and The National Center for Employee Ownership (www.nceo.org). Both have lists of institutional trustees with ESOP experience.

If you have not found a closely-held business ESOP trustee...I would suggest you speak with Marshall & Ilsley Trust Company out of Wisconsin. Our law firm has worked with them on several of these types of companies. However, I hope your client? understands the cost involved.

Beth, I stongly recommend that you take RLL's advice and check with the ESOP Association or the NCEO before recommending an institutional trustee to your client.

Did beth expect to wait two months to get an answer ???

Does anyone have an impression as to whether closely-held companies with ESOPs are using institutional trustees or whether they are individually trusteed? What are most doing?

It depends on the character of the assets held under the ESOP. If such assets are substantially (or wholly)comprised of employer stock, most companies will appoint a member of the company as trustee.

Many closely-held company ESOPs (approximately 64.7%) have a Board of Trustees composed of one or more individuals appointed by the Board of Directors. The Board of Trustees very often also has the responsibilities which might otherwise be assigned to an Administrative Committee if there were an institutional trustee.

When a transaction (which affects the ESOP) is proposed and which might cause the individual trustees to have a possible (or perceived) conflict of interest, it is very common to engage an independent fiduciary to represent the ESOP in that transaction.



[This message has been edited by RLL (edited 05-08-2000).]