An Employee Stock Ownership Plan (ESOP) is an employee benefit program that grants workers ownership stakes in the company through the allocation of shares of stock. ESOPs serve multiple purposes, benefiting both the sponsoring company, often the selling shareholder, and participating employees. These plans offer various tax advantages, qualifying as qualified plans, and are frequently employed by employers as a corporate finance strategy to align the interests of their workforce with those of their shareholders. ESOPs promote employee ownership, foster a sense of ownership and engagement among workers, and can serve as a succession planning tool for business owners looking to transition ownership.
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