What is an Employee Stock Ownership Plan (ESOP)?
Employee Stock Ownership Plans (ESOPs) are a form of employee ownership in which the owner(s) of a company sells stock to an employee trust. “An Introduction to ESOPs,” published by The National Center for Employee Ownership, provides a more detailed definition: “An ESOP is a qualified, defined contribution employee benefit plan that invests primarily in the stock of the employer company. ESOPs are “qualified” in that in return for meeting certain rules designed to protect the interest of plan participants, ESOP sponsors receive various tax benefits. ESOPs are “defined contribution plans” in that the employer makes yearly contributions that accumulate to produce a benefit that is not defined in advance. (In contrast, many pensions plans are defined benefit plans; employees are guaranteed a specified benefit, which the company funds by making the necessary contributions.) Return to Top What is an NCB affinity partner? To maximize our cooperative impact, NCB establishes relationships wit