Summary: Pursuant to a congressional request, GAO provided information on the benefits participants received from employee stock ownership plans (ESOP), focusing on: (1) the value of ESOP participants' accounts; (2) the amount of company stock that participants received; and (3) how companies allocated benefits among participants.
GAO found that: (1) ESOP value was tied to the performance of the sponsoring company, which made it less predictable to determine the retirement incomes ESOP provided; (2) 59 percent of surveyed companies provided no other retirement benefits than those derived from ESOP; (3) average individual ESOP balances were smaller than the average balance of other employer-provided individual accounts, but ESOP balances grew more rapidly from 1981 to 1987; (4) the average value of surveyed ESOP was $4,390 in 1981 and $12,977 in 1987; (5) the average value of defined contribution pension fund balances in 1987 was $14,339; (6) 98 percent of ESOP allocated benefits in proportion to employee compensation, which resulted in highly compensated employees accruing vested account balances that were, on average, over 4 times greater than those of other vested participants; (7) ESOP participants' ownership of sponsoring company stock rose between 1981 and 1987 from a median of 8 to 23 percent; and (8) active companies terminated a total of 164 of 541 ESOP, a substantially higher rate than that reported for other types of pension plans.
