The trustee board of an EOT is the company's controlling shareholder. Most trustee boards are doing the job for the first time, with a deed they didn't draft and no map. This is the map.
What the trustee board is for
One sentence covers it: the trustee board holds the company on trust for its employees, and must act in their interests — current and future — as beneficiaries of that trust. Everything else is elaboration. In practice the role divides into four duties:
- Steward the asset. Understand how the company is performing, satisfy yourselves it is being run competently, and hold the company board to account for it.
- Guard the structure. Ensure the trust's qualifying conditions go on being met, that the deed is followed, and that anything touching the shares — new issues, transfers, corporate transactions — crosses the trustee table first.
- Represent the beneficiaries. Employees cannot attend board meetings; the trustee board is how their ownership is exercised. That means knowing what employees actually think, not assuming it.
- Take the big decisions well. A handful of decisions — appointing or removing directors, approving a sale, major distributions — belong to the trustees. They arrive rarely and matter enormously; the board's job is to be ready for them.
What it is not for
The trustee board does not run the company. It does not approve the marketing plan, interview hires, or second-guess pricing. A trustee board that manages is failing in the same way as one that sleeps — and it usually provokes the company board into hiding things, which is the beginning of every governance breakdown we are asked to repair.
The line to hold: the company board decides how the business is run; the trustee board judges whether it is being run well.
Composition
Most boards mix three kinds of trustee: employee-elected (legitimacy and a direct line to the workforce), company-appointed (context and continuity), and independent (experience and objectivity). Two observations from practice:
- Founders serving as trustees while also being paid deferred consideration carry an obvious conflict. It is manageable — with disclosure, abstention and good minutes — but boards should manage it explicitly rather than politely ignore it.
- Employee trustees do the job best when they are trained, inducted and reminded that they represent all beneficiaries — not their department, and not the loudest voices. Investing in them is the cheapest governance improvement available.
The working rhythm
A functional trustee board typically:
- Meets quarterly, with at least one meeting a year devoted to the long view rather than the quarter.
- Receives management accounts and a short narrative from the company board before each meeting — agreed in advance as an information protocol, so reporting is an obligation rather than a favour.
- Holds one session a year with the company board together, and one without it present.
- Reports to employees annually, in plain language: how the company did, what the trust decided, what the deferred consideration position is.
- Reviews itself once a year — attendance, skills, succession, and whether the meetings are worth the sandwiches. Our annual governance checklist structures this.
When the boards disagree
They eventually will — over a dividend, a director, an acquisition, the founder's role. Disagreement is not failure; it is the system working. What turns it into crisis is the absence of process: no agreed escalation route, no independent voice, and minutes too thin to reconstruct who decided what. The time to build those safeguards is before they are needed. An independent trustee is often the difference between a hard conversation and a stalemate.
If your trustee board recognises the problems here more than the rhythms, that is common and repairable — see technical advice for employee-owned businesses, or ask us about trustee training and board reviews.