An ESOP, or Employee Stock Ownership Plan, is a type of employee benefit plan that enables employees to own part or all of the company they work for. It is a qualified defined contribution plan that is a stock bonus plan or a stock bonus/money purchase plan
. ESOPs grant company stock to employees, often based on the duration of their employment, and are most commonly used to facilitate succession planning, allowing a company owner to sell his or her shares and transition out of the business
. ESOPs can create higher productivity, employee retention, tax advantages, and higher job satisfaction
. In essence, an ESOP is a retirement plan that also serves to motivate employees and align their interests with those of the company
