ESOP meaning in Accounts and Finance ?

Employee stock ownership, or employee share ownership, is where a company's employees own shares in that company (or in the parent company of a group of companies). Employees typically acquire shares through a share option plan. Such plans may be selective or all-employee plans. Selective plans are typically only made available to senior executives. All-employee plans offer participation to all employees (subject to certain qualifying conditions such as a minimum length of service).

Most corporations use stock ownership plans as a form of an employee benefit. Plans in public companies generally limit the total number or the percentage of the company's stock that may be acquired by employees under a plan. Compared with worker cooperatives or co-determination, employee share ownership may not confer any meaningful control or influence by employees in governing and managing the corporation.

Some companies, particularly private companies, use employee share ownership to support a company's culture. Employee ownership is when all employees together own a substantial stake and have a meaningful voice in the company (or group) that employs them.

A number of countries have introduced tax advantaged share or share option plans to encourage employee share ownership.