> As he's been the largest shareholder at the company, with his departure he decided to transition the firm to being an employee ownership trust. The trust will see that CodeWeavers continues to operate for the benefit of the community and staff.
I'm not familiar with the "employee ownership trust" concept, so I was curious as to how it differed from a worker co-op. On reading a layperson description, is it perhaps misnamed? It seems like people consider it to be a form of employee ownership, but (a) employees do not buy in (b) employees are not bought out when they leave (c) employees do not necessarily have any kind of voting rights, and the trust could be managed by trustees who are not elected by (or from among) employees. It sounds like EOTs _can_ share profits or pay dividends out to employees, but don't need to. So in what sense is it employee "ownership"? It seems like it's just a perpetual trust whose goal includes employee well-being.
An org on employee ownership says [1]:
> There is no legal definition of what separates an EOT from similar trusts, but to be an EOT, the purpose of the trust should include the well-being of the company’s employees.
So it's a trust which exists _for_ the employees, but does that mean the _own_ it?
A few months ago I listened to this podcast [3] about a perpetual trust set up to benefit stray cats. Despite it being created _for_ stray cats, of course no one claims that the trust is _owned_ by stray cats.
Here's my interpretation of how this might work (reading between the lines and based on how ESOPs typically work):
1. The founder wanted out but didn't want to sell to a PE firm, and they wanted to give control to the employees.
2. The founder set up a trust that will gradually buy them out over the course of 7 years. The financial arrangement is probably something like: the trust got a long term loan for the initial tranche of purchases which it will pay back via dividends attached to those shares. It will also use those dividends to pay for future tranches of shares.
3. Employees don't have any ownership rights at all, the trust is the sole shareholder. Employees do have control of the trust, to an extent, because at least some members of the trustee board will be elected from the staff. The trust is probably written such that the trustees can elect to distribute to the staff some or all of the dividends remaining after founder share purchases and debt service.
To answer the ownership question, trusts don't really have owners. Trust materialize into existence when a grantor (the founder) funds them for the benefit of beneficiaries (in this case the staff) and are controlled by trustees (in this case, at least some part of whom are staff).
Thank you, I was real curious how this was working. It sounds so fraught, I admire people who are able to handle ambiguity, and avoid simple interpretations, better than I.
My naive read:
You have to convince a bank to give a brand new entity a loan, with the only real benefit accruing to the bank in the form of interest and yourself in the form of giving yourself a retirement gift. I honestly don't understand why anyone would play ball with that unless the interest rate was, say, 3-4 points above treasuries, so now it's the same thing as a PE buyout, but at least the money went to you
There are lots of ways to structure it that don't involve an actual bank loan. It's very possible that the founder loaned the first tranche of shares to the trust and the trust is paying some amount of interest on that loan over time. Sometimes this is called seller financing.
Wait until you hear about charitable trusts! (And specifically, ones defined into existence by a person's will, such that it's up to a probate judge to figure out how to make the act of charity happen.)
In general, in trust law, a fiduciary duty is imposed upon the executors of a trust with respect to the trustees. In other words, the executors of a trust must act in the trustees' financial best interests, even where these interests would conflict with the executor's financial interests. To do otherwise is a breach of contract.
You can't trust (heh) regular people to be able to keep this duty in mind; which is why the executors of most trusts are law firms. Individual people sometimes make the mistake of making another individual person the executor of a trust they're establishing; but corporations are generally smarter than that.
In the case of corporate-established trusts, the question that can "go wrong" here isn't usually who the executor is, but rather, how the employees are defined to communicate their collective "financial best interest" to the executor. Very likely, there is a board of trustees defined in the structure of the trust, where some or all members of said board are elected by employees (similar to shareholders electing a board of directors of a company.)
A trust has three interested parties. The _grantor_ establishes and funds the trust. The _beneficiary_ benefits from the assets inside the trust. The _trustee_ administers the trust and has a fiduciary responsibility to the beneficiary. Depending on the trust two or more of these may be the same person or people. Different types of trusts have different tax and legal treatments.
To my limited understanding of US trust law, the term "executor" is typically reserved for estates rather than trusts, but maybe some states use that terminology?
I'm also a previous Crossover customer who now uses proton (via lutris). I have to wonder if something like Crossover necessarily needs to exist in the long term; I suspect that part of the rationale for it was that they needed some sort of UI to present/sell the real work they did to make stuff run smoothly without needing users to do a bunch of manual Wine configuration. Obviously there are business caveats to tying yourself so closely to only one paying customer, but it doesn't seem like there's much of a technical need for the work they do to be tied to an in-house UI.
I'm not familiar with the "employee ownership trust" concept, so I was curious as to how it differed from a worker co-op. On reading a layperson description, is it perhaps misnamed? It seems like people consider it to be a form of employee ownership, but (a) employees do not buy in (b) employees are not bought out when they leave (c) employees do not necessarily have any kind of voting rights, and the trust could be managed by trustees who are not elected by (or from among) employees. It sounds like EOTs _can_ share profits or pay dividends out to employees, but don't need to. So in what sense is it employee "ownership"? It seems like it's just a perpetual trust whose goal includes employee well-being.
An org on employee ownership says [1]:
> There is no legal definition of what separates an EOT from similar trusts, but to be an EOT, the purpose of the trust should include the well-being of the company’s employees.
So it's a trust which exists _for_ the employees, but does that mean the _own_ it?
A few months ago I listened to this podcast [3] about a perpetual trust set up to benefit stray cats. Despite it being created _for_ stray cats, of course no one claims that the trust is _owned_ by stray cats.
[1] https://www.nceo.org/article/introduction-employee-ownership... [2] https://www.esoppartners.com/blog/employee-ownership-models [3] https://www.npr.org/2023/02/22/1158865140/stray-cats-dixfiel...