Definition of ESOP | Employee Stock Ownership Plan

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Employee Stock Ownership Plan (ESOP) Definition

Definition
An investment plan in which the company gives stock to the plan and holds the stock in trust to benefit its employees. Over time an employee becomes vested with the plan and receives shares upon leaving the company.

Expanded Definition
An employee stock ownership plan (ESOP) can offer benefits to both employers and employees. ESOPs have even been shown to help businesses survive economic downturns. Before establishing an ESOP, the company must receive approval from the IRS.

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