Can distributed shares be freely resold?
Shares distributed from the ESOP can be subject to a right of first refusal in favor of the employer or the ESOP, or both. This prevents the shares from being freely transferable by the former participant. Return to the top of the page. 39. What is the put option? The ESOP put option requires a privately-held ESOP company to repurchase company stock distributed to ESOP participants during a 15-month period, beginning with the date the stock is distributed, for its appraised fair market value. The 15-month term will include at least two different annual valuations. The ESOP may be given the right to purchase the departing participant’s stock (with cash accumulated in the ESOP) by “picking up” the put option, but only the employer company can be legally required to honor the put option. Payments under the put option may be made in a lump sum or in installments at least annually. The put option installment payment period may not normally exceed 5 years (except for certain large account ba
