Employee Share Ownership Trust - ESOT
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Definition of 'Employee Share Ownership Trust - ESOT'
A program that facilitates the acquisition and distribution of a company's shares to its employees.
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Investopedia explains 'Employee Share Ownership Trust - ESOT'
ESOTs are trust accounts with which a company can sell its shares to employees. Some reasons to provide the ESOT include the following:
1. The ability for company to test out how an employee share ownership plan would work
2. The creation of a mini market for the transference of company's stock, which allows the company to obtain funds efficiently and educate their employees in share ownership
3. The provision of a tax incentive to shareholders should they decide to sell their shares in the company to the company's ESOT
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