ESOP expectation and reality.(Editorial)(Employee Stock Ownership/Option Plan)(Tribune Co. )

Pensions & Investments, April, 2007

The expectations that Chicago's Tribune Co. ESOP inspires won't necessarily match reality for either the success of the company or the fortunes of employees. Employees should only cautiously welcome the employee stock ownership plan, a benefit shoved on them by the Tribune as a sort of last resort to cash out disenchanted shareholders after a search for a better deal yielded nothing.

For the company, the structure of the Tribune deal as a 100% employee-owned S corporation will enable it to avoid paying federal corporate income tax. That advantage could ultimately benefit employees by keeping resources in the company for operations, expansion and paying down debt, all potentially boosting the stock value. But the ESOP, while it gives employees ownership,...

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