ESOP – EMPLOYEE SHARE OWNERSHIP PLANS
Employee Share Ownership Plans (ESOP) are increasingly being used by business owners who want to gain immediate term productivity and engagement benefits while providing longer-term stability for their business.
WHAT IS AN ESOP?
An ESOP is a mechanism to allow employees to own a share of the company they work for.
Advantages for you as the business owner:
You can attract and retain high calibre staff by offering a direct stake in the business
When you want to move on from your business an ESOP can be an effective and efficient way to transfer ownership
Save tax by making payments to the ESOP that are deductible
Advantages for your employees include:
Providing a savings vehicle where they can accumulate savings, acquire and hold shares
Creating a sense of community as employees feel more committed to ensuring the business thrives
Save tax by purchasing shares from pre-tax dollars
ATTRACT, RETAIN AND MOTIVATE KEY EMPLOYEES
ESOPs help develop an “Ownership Mindset” culture with engaged employees so that they are invested in the business’ success and start to think and act like business owners.
ESOPs create a win-win situation. Employees benefit by owning a stake in the business while the employer benefits from improved employee performance.
ESOPs are a transparent and easy to implement mechanism that provides clear rules and guidelines to help with employee incentives and business succession.