ESOP

Employee Stock Ownership Plan

Retirement plan giving employees ownership stake in the company through allocated shares.

When you'd see it: Compensation and ownership-transition discussions, especially in private companies and as a succession option for owners.

Why it matters: An ESOP gives employees an ownership stake through a trust, often as a retirement benefit and a way for a founder to sell the company to its workers. It changes incentives and carries specific tax advantages.

Common mistakes: Confusing an ESOP (a formal retirement and ownership trust) with ordinary stock options. They are different instruments with different rules.