ESOP
Business & Finance abbreviation · Finance
| Stands for | Employee stock ownership plan |
|---|---|
| Categories | Business & Finance |
ESOP stands for Employee stock ownership plan, a finance abbreviation.
In the United States, a tax-qualified retirement plan that invests primarily in the sponsoring employer's stock, giving employees an ownership stake that grows with service. ESOPs are often used to transfer ownership of private companies from founders to employees.
Example: The founders sold 100 percent of the company to an ESOP, making it fully employee-owned.
Usage notes
US ESOPs are governed by ERISA, and owners selling a qualifying C corporation to one can defer capital gains tax. In India, the UK and startup usage, ESOP often means "employee stock option plan" or "employee share option plan," a share-option scheme for staff, so the meaning depends on the country. Publix Super Markets is a well-known US employee-owned company.
Related abbreviations
More finance abbreviations
- DPO – Days payable outstanding
- DSCR – Debt service coverage ratio
- DSO – Days sales outstanding
- EAR – Effective annual rate
- ECM – Equity capital markets
- ERP – Equity risk premium
- EV – Enterprise value
- EV/EBITDA – Enterprise value to EBITDA
- EVA – Economic value added
- FCF – Free cash flow
- FCFE – Free cash flow to equity
- FCFF – Free cash flow to the firm