employee stock ownership plan (ESOP)
Definition
Employee benefit scheme intended to motivate employees by giving them a stake in the firm's success through equity participation. Purchase of shares by employees is funded by a loan (usually from a bank) guaranteed by the employer. This plan costs little or nothing to the employer because the loan principal is paid-off from the dividend payment to the employees, and the loan interest is a tax-deductible expense. Moreover, this plan raises the firm's capital to asset ratio by bringing in capital from new stock issue (share issue). See also employee profit sharing plan (ESPS).
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employee stock ownership plan (ESOP) is in the HR, Teams, & Training subject.
employee stock ownership plan (ESOP) appears in the definition of the following term: employee profit sharing plan (EPSP)
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