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Leveraged ESOP

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Leveraged ESOP
An employee stock ownership plan in which the sponsoring company borrows funds in order to purchase shares from itself, which it then distributes or sells to employees as part of their compensation. It repays the loan with annual contributions.

leveraged ESOP
An Employee Stock Ownership Plan that borrows funds to purchase securities of the employer.


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We investigated that idea and we were able to create a leveraged ESOP (Employee Stock Option Plan), whereby we pay down on our loans and the company has value, so that when we retire we share in the value of the company.
Michael Oneal, a Tribune reporter, worked out the numbers, and as he said, there is a "rich upside and chilling downside" to the heavily leveraged ESOP deal.
Special rules apply to collectively bargained plans and certain leveraged ESOPs.
 
 
 
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