What is an Employee Stock Ownership Plan – ESOP ?
An employee stock ownership plan, or ESOP for short, is a stock bonus plan that invests corporate profits back into the stock of sponsoring employer by rewarding employees with company stock. An ESOP is a qualified plan and therefore, provides special tax benefits to the sponsoring employer, plan participants, and even the shareholder who sold the shares which were made available to the ESOP. ESOPs are defined contribution plans which consist of a stock bonus plan or a hybrid which has a combination of a stock bonus plan and a money purchase pension plan. Employee stock ownership plans keep the employees focused on bettering the company and thus, becomes a win-win proposition for all parties involved.
An employee stock ownership plan, or ESOP for short, is a stock bonus plan that invests corporate profits back into the stock of sponsoring employer by rewarding employees with company stock. An ESOP is a qualified plan and therefore, provides special tax benefits to the sponsoring employer, plan participants, and even the shareholder who sold the shares which were made available to the ESOP.
