Investopedia

Continue to Site »

Employee Share Ownership Trust - ESOT

Filed Under » , , , ,
Dictionary Says

Definition of 'Employee Share Ownership Trust - ESOT'

A program that facilitates the acquisition and distribution of a company's shares to its employees. ESOTs are trust accounts through which a company can sell its shares to employees. Employee share ownership is supposed to boost employee morale and improve employee incentives to work hard and make decisions that are in the company's best interests. Such an arrangement thus helps to align the interests of company employees with those of other shareholders.
Investopedia Says

Investopedia explains 'Employee Share Ownership Trust - ESOT'

Some reasons for a company to provide an ESOT include the following:

1. the ability for the company to test out how an employee share ownership plan would work
2. the creation of a mini market for the transference of a company's stock, which allows the company to obtain funds efficiently and educate its employees in share ownership
3. the provision of a tax incentive to shareholders should they decide to sell their shares in the company back to the company's ESOT

Articles Of Interest

  1.

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.

  2. A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.

  3. Your Employer's Stock: Should You Buy In?

    Many retirement plans include the offer to purchase company stock. Doing so has its advantages, but there are drawbacks too.

  4. Stock Basics Tutorial

    If you're new to the stock market and want the basics, this is the tutorial for you!

  5. Accounting and Valuing Employee Stock Options

    Learn the different accounting and valuation treatments of ESOs, and discover the best ways to incorporate these techniques into your analysis of stock.

  6. 4 Traits Banks Look For In New Staff

    Trust is the number one trait that banks are looking for in new hires, but there are other abilities that are equally desired.

  7. Broker Commissions Are Here To Stay

    With two developed nations adopting a firm anti-commission stance, questions have arisen over whether or not the United States should follow suit. Find out why such a development is unlikely.

  8. 10 Great Summer Jobs For Teens

    There are a lot of summer jobs out there, find out what's available, how much it costs and what skills you need.

  9. The Path To Becoming A CEO

    Think you have what it takes to be chief executive? Find out what those at the top have in common.

  10. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  2. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  3. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  4. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  5. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  6. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.
Trading Center