employee stock ownership plan (ESOP) definition

employee stock ownership plan (ESOP)

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).

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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