Employee Share Ownership Trust (ESOT)

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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated September 30, 2020

What is an Employee Share Ownership Trust (ESOT)?

Employee Share Ownership Trust (ESOT) refers to a plan that assists in acquiring and allocating a company's stock for employees.

How Does an Employee Share Ownership Trust (ESOT) Work?

A company uses an ESOT to sell its stock to its employees. ESOT's are trust accounts that help the company to achieve this purpose.

Why Does an Employee Share Ownership Trust (ESOT) Matter?

Setting up ESOTs has three purposes. The first is that they provide an arena for the company to review how their employees will handle their shares. Also, it offers a tax inducement for the employee to utilize should they decide to sell their shares back to the company. Additionally, the company develops a small market for the shares to be transferred to their employees in a cost effective manner as well as trains the employees on stock ownership.

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At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Employee Share Ownership Trust (ESOT).
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