Employee stock ownership plan

Also found in: Dictionary, Thesaurus, Wikipedia.
Related to Employee stock ownership plan: Employee Stock Option Plan

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.

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.

References in periodicals archive ?
Accurate company valuations are critical when it comes to establishing an employee stock ownership plan.
The IRS disqualified the Plan because it determined that the Plan did not satisfy the requirements relating to employee stock ownership plans in IRC Section 401(a)(28)(C) and thus was not a qualified plan under IRC Section 401(a).
The employee stock ownership plan was mandated in the Chrysler Corp.
As a result, the firm introduced an employee stock ownership plan (ESOP) that has turned out to be good for everyone.
Until now, the idea of starting an employee stock ownership plan for international divisions wasn't for the faint of heart.
2003-23 addresses the practical problem of employee stock ownership plan (ESOP) participants seeking to roll over distributions of S corporation stock into an individual retirement account (IRA), when the trustee or custodian of such an account is not a permissible S shareholder.
According to the report, more than 56% of respondents offered two or more different types of plans, in many cases a defined benefit plan and either a 401(k) plan, a profit-sharing plan or an employee stock ownership plan.
stock using an employee stock ownership plan (ESOP) drew attention to the tax benefits available to sponsors of such plans.

Full browser ?