Employee stock options aren’t just for startups any more

Integrity Marketing Group, an insurance company that’s owned by a private equity outfit, announced that it will pay out an aggregate of $50m to its 750 employees in bonuses AND give them stock options for the first time.

December 16, 2019

Integrity Marketing Group, a private equity-backed life and health insurance biz, announced last week that they’re extending ownership to their 750 employees and distributing a $50m payout to recognize the company’s wild success. 

This is on the heels of the company increasing earnings by 800% and acquiring 18 insurance product distributors this year.

Half of private US companies give employees some financial stake…

Usually in the form of stock options or profit sharing. But ceding ownership is rare. 

The most common employee-owned biz situation is through an employee stock ownership plan.

Here’s how they work: A company takes out a loan to buy back shares from shareholders, then divvies up shares among employees. Profits from the employee-owned segment aren’t taxed, so that’s how the biz can pay back the loan. 

The average employee stock ownership planholder owns a share worth almost $120k, and the company has to buy back the share when you split (or retire). Think of it as building equity in your job.

So why would businesses want to give up this type of value?

Well, research points to less turnover and increased productivity at employee-owned outfits.

Offering ownership could also help narrow the wealth gap between people who work for a living and people who get rich off investments.

Some wheels are turning in Congress about this, too: A bill passed last year makes it easier for small businesses to get loans to fund employee stock ownership plans. 

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