Employee stock ownership plan (ESOP)

A company contributes to a trust fund that buys stock on behalf of employees.

Employee Stock Ownership Plan

An employee benefit in which employees are issued or sold shares in the publicly-traded company for which they work after a certain number of days of employment. ESOPs are designed to give employees equity in the company to boost morale and thereby improve productivity. ESOPs receive various tax benefits, and may give employees a greater say in the election of the board of directors.

Employee Stock Ownership Plan (ESOP)

A qualified retirement plan in which employees receive shares of the common stock of the company for which they work and the company receives an investment tax credit. The purpose of this type of plan is to give employees a vested interest in the company, thereby providing them with an additional incentive toward greater productivity. See also leveraged ESOP.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Employee stock ownership plan (ESOP).

An ESOP is a trust to which a company contributes shares of newly issued stock, shares the company has held in reserve, or the cash to buy shares on the open market.

The shares go into individual accounts set up for employees who meet the plan's eligibility requirements.

An ESOP may be part of a 401(k) plan or separate from it. If it's linked, an employer's matching contribution may be shares added to the ESOP account rather than cash added to an investment account.

If you're part of an ESOP and you leave your job, you have the right to sell your shares on the open market if your employer is a public company.

If it's a privately held company, you have the right to sell them back at fair market value. The vast majority of ESOPs are offered by privately held companies.

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References in periodicals archive

Kaplan Fiduciary Group is a leading provider of corporate governance and fiduciary advisory services to companies sponsoring Employee Stock Ownership Plans (ESOP) and other qualified retirement programs.

ESOP Governance Discussion

Dubai: The number of Employee Stock Ownership Plans (ESOPs) companies has grown substantially during the past 10 years, and they are currently estimated to hold more than $500 billion in assets and cover over 10 million workers in the US alone.

Changes in laws needed to introduce ESOPs

A combination 401(k) plan and employee stock ownership plan, commonly called a KSOP, can be used to decrease the administrative and legal expenses for employers who maintain both a 401(k) plan and an employee stock ownership plan.

ESOP, meet 401(k). (Investment Options)

Krause president Chet Krause, who set up an employee stock ownership plan 14 years ago in an attempt to keep ownership local, said the ultimate per-share price would be significantly higher, although it was not clear if a higher per-share price would increase the purchase price.

F&W Publications agrees to acquire Krause Publications

Perhaps they have accumulated stock through an employee stock ownership plan, or through stock options that some companies offer employees in lieu of larger salaries.

Donating stock to the VRG

He has set up an employee stock ownership plan in which his workers own 3% of the company--with the potential to own 10%.

Vintage Switches

Half year figures include a charge of $675m for CA's Key Employee Stock Ownership Plan.

COMPANY RESULT: COMPUTER ASSOCIATES INTERNATIONAL INC

We "use it to teach people how to work together to achieve common goals and thereby gain control over their lives." As a result of this respect for workers, the business is "more responsive to changing marketplace conditions while providing a tremendous inner satisfaction and sense of meaning to employees." The workers at this company set their own productivity goals that are tied to quarterly bonuses and an employee stock ownership plan. Profits and employee morale remain high in a competitive industry.

The give and take of corporate stewardship

BLS: Bureau of Labor Statistics ESOP: Employee Stock Ownership Plan NCEO: National Center for Employee Ownership PAYSOPs: Payroll-based Stock Ownership Plan

Profit sharing and employee ownership: policy implications

Your organization is about to become the proud possessor of a leveraged ESOP--short for employee stock ownership plan. Or more correctly, a leveraged employee stock ownership plan is about to become the proud possessor of your organization ...

Communicating the fabled ESOP