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Free Article Outlines Strategies for Executive and Board Transitions

Free Article Outlines Strategies for Executive and Board Transitions

Posted: Jul 12 2019

The average age of a bank executive is 55—an age that carries a wealth of experience and institutional knowledge, but also calls for careful transition planning. A new article in the ABA Banking Journal outlines strategies for transitioning stock options and ownership when bank directors and execs retire.

Smaller institutions “typically have illiquid stock that can be difficult to valuate and sell,” writes John Erwin of PKM, an Atlanta-based accounting and advisory firm. “This can present challenges when directors and executives want to cash in on their ownership, but there is no clear market or price point for them to make their exit at.”

Erwin looks at several approaches to creating stock liquidity, including stock buybacks, employee stock ownership plans, cash and equity sells. 'The sooner and more clearly defined a bank’s succession plan is developed,” Erwin writes, “the easier and smoother the transition will be for customers, employees and shareholders alike.” Read the article.

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