Quick Definition

An Employee Stock Ownership Plan (ESOP) is a retirement plan that allows employees to own a stake in the company they work for, typically through the acquisition of company stock.

Examples

• 1A tech startup might establish an ESOP to incentivize its employees by offering them shares as part of their compensation package.
• 2A large manufacturing company could use an ESOP as a strategy to gradually transition ownership from the founding members to the employees over time.
• 3A small business owner retiring might sell the business to the employees through an ESOP, ensuring the company's legacy continues with those who know it best.

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