A retirement plan that runs on company stock can turn into a company’s next liquidity crisis — and U.S. accounting rule-setters are weighing whether businesses should be forced to spell out the size and timing of those buyback bills.
The issue centers on employee stock ownership plans (ESOPs), a common way for private-company founders to sell their businesses to workers as they head for the exits. The pitch is easy to understand: employees build retirement wealth with company stock, and owners get a tax-advantaged path to succession. The catch can be harder to spot — and far more expensive.
In many private companies, employees can’t freely sell their shares on a public market. Federal rules generally require employers to give workers a “put” right — the ability to demand that the company repurchase the stock at fair value when they retire or leave. In plain English: when employees cash out, the company has to pay.
Those payouts can swell over time, especially as a company’s value rises and as an ownership plan matures and more long-tenured employees reach retirement age. Lenders say the obligation can behave like debt because it can force large cash outflows, sometimes on a timeline that’s difficult for outsiders to predict from a standard set of financial statements.
Now, the group that advises U.S. accounting standard-setters on private-company issues is considering whether to take up the topic as a new research priority — with a focus on what companies should disclose about these repurchase obligations.
A staff memo dated February 17 lays out the question for the Private Company Council’s public meeting on March 3, 2026, asking members whether they want to research ESOPs “from a plan sponsor perspective” and, if so, whether to focus on presentation, disclosures, or both.
What’s Missing, Lenders say
Current accounting guidance requires companies to disclose that a repurchase obligation exists and to provide the fair value of shares already allocated to employees that are subject to repurchase. But the memo notes that private companies generally are not required to record the repurchase obligation as a liability on the sponsor’s balance sheet. That can leave the biggest question — future cash demands — less visible than many creditors would like.
The loudest push for change has come from private-company lenders. Members of ProSight Financial Association, a lender group that regularly meets with the council, have been pressing since 2023 for disclosures that go beyond a basic description.
They argue they often don’t receive enough information in the company’s financial statements to assess the timing and amounts of expected future cash outflows. At a minimum, they want companies to disclose the size of the obligation and an estimate of when cash will be paid out — for example, in a five-year schedule, similar to the way debt maturities are laid out.
They also want a plain-language explanation of how management plans to cover the payouts — whether through operating cash, borrowing, insurance, or other strategies — so lenders can better judge liquidity risk.
A Growing Footprint in the Economy: $2.1T in Assets
The memo also points to how widespread these plans have become. Using data from the National Center for Employee Ownership, the staff notes there are 6,609 ESOPs in the United States holding nearly $2.1 trillion in assets, covering 15.1 million participants, and tied to about 6,411 unique companies — the vast majority of them private. The plans are heavily concentrated in industries such as manufacturing, professional services, construction, and finance-related fields.
ProSight members told the council that these plans have become more prevalent in the last three to five years as baby boomers retire and increasingly use employee ownership plans as an exit strategy — a trend that can accelerate the eventual wave of cash-outs.
Not Everyone Wants New Rules
But the memo also highlights resistance. When the Financial Accounting Standards Board asked for public feedback in its 2025 agenda consultation, 18 stakeholders responded on whether disclosures about these repurchase obligations should be enhanced — and most ranked the topic as a low priority, according to the staff summary.
Skeptics argue that forecasting future repurchase payments is inherently uncertain because payouts are triggered by unpredictable events like employee departures and retirements. Preparing multi-year estimates could require significant management judgment, time and cost — and might even require hiring actuaries or valuation specialists. Several stakeholders said that, because of the uncertainty in timing, additional quantitative disclosures might not be reliable.
What Happens Next
If the council decides to pursue research, the staff memo outlines a next step: an education session planned for June 2026, followed by outreach to investors, lenders, preparers and auditors to gauge how common the problem is, what information users actually need, and whether the benefits of new disclosures would outweigh the cost to private companies.
For now, the fight is about visibility. Employee ownership may be a headline-friendly solution to the boomer succession wave. But the buyback promise that makes those plans work can also become a cash obligation that reshapes a company’s future — and lenders want that future spelled out before the bill comes due.
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