ESOP (Employee Stock Ownership Plan)

An Employee Stock Ownership Plan (ESOP) is a program that gives employees ownership interest in their company through shares of stock. It’s a way for companies to motivate employees by aligning their interests with the company’s success. Typically, the company sets up a trust to hold shares allocated to employees, often as part of their retirement benefits. As the company grows and the value of its stock increases, employees benefit through increased share value and potential dividends. ESOPs can also serve as a tool for succession planning and corporate finance.