Employee Stock Ownership Plans

Employee Stock Ownership Plans (ESOPs) provide a firm’s workforce with ownership interest in the firm by providing employees with stock ownership, with shares held in an ESOP trust until the employee retires or leaves the company. ¬†ESOPs stand in contrast to other schemes for employee ownership, such as direct purchase of stock, stock options as compensation, or stock obtained through profit sharing plans. ¬†The National Center for Employee Ownership reports that ESOPs are by far the most common form of employee ownership in the US, with about 11,000 American companies participating in these plans.