What is an ESOP?
Like a publicly traded company, an Employee Stock Ownership Plan (ESOP) is a legal business structure that utilizes shares held in Trust to represent ownership in, as well as the overall value of, the organization. However, whereas shares in a public company are available to the general public with share value being determined by supply and demand in the open market, ESOP shares are only available to employees of the company and the share value is determined annually by an independent valuation firm selected by the ESOP trustee.
There are approximately 10,000 ESOPs in the U.S. today. Like Windings,
- About 4,000 are 100% employee owned
- About 56% have a supplemental retirement plan alongside the ESOP shares [such as a 401(K) or pension]