Employee Stock Ownership (ESOP)
An employee benefit plan, developed in order to improve company’s cash flow and to make employees partial owners of the company. These contributions are made by the employer and is invested in company stocks.
In exchange for stocks, company gets highly motivated workers, improved cash-flow and finance strategy. Seeing company shares doing well, plan participants are encouraged to do what’s best for the shareholders, because they are one of them.
The main benefit for the employees is a share in the company’s earnings and equality with existing shareholders. Because of tax-benefits for the company, ESOPs are strictly regulated.