What an ESOP Really Is and Why It Exists
Employee Stock Ownership Plans , or ESOPs, are often discussed as a benefit or a morale tool. In practice, they are something more specific and more disciplined. An ESOP is a qualified retirement plan that owns stock in an operating company. It exists inside a defined legal and financial framework, governed by ERISA, and supported by valuation, financing, and compliance requirements. At its core, an ESOP is a transaction structure. Shares are sold to a trust on behalf of employees. The trust...
