An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that makes employees owners of stock in their company.
ESOP Employee Advantages:
- Employees receive ownership interest in the company
- Employees are not taxed until shares are distributed
- Stock options typically come at no cost to the employee
ESOP Employer Advantages:
- As “owners” of the company employees are often motivated to stay with the company longer
- Capital appreciation
- Tax advantages including reduced tax liability