What is Gradient of Ownership in Succession Planning?

A gradient of ownership is recommended in succession planning in order to allow those that have the greatest responsibility in the company to purchase sufficient numbers of shares.

It does not exclude key employees at lower levels from becoming shareholders but it does limit the number of shares they can purchase until they move into a higher level of responsibility.

For example, the Chairman, CEO and President have the largest responsibility in most organizations.

The leadership is charged with making the tough decisions that affect the profitability of the company.

Therefore, the top management should be allowed to hold the largest percentage of shares.

A healthy return on shares creates a strong market for shares in most companies.

Shares are very attractive for creating wealth for employees.

In order to continue to strengthen the company, only those that make the greatest contribution to profit should be invited into ownership.

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