How Do Employee Stock Ownership Plans (ESOPs)differ from Stock Option

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The Answer is Both encourage employees to focus on the success of the organization as a whole.However,stock option plans give employees the right to buy a certain number of shares of stock at a specified price.The employee stands to obtain a financial gain if the stock price has gone up since the price was fixed.Although more companies are extending stock options to a larger percentage of their employees,the more common form of employee ownership is an employee stock ownership plan (ESOP).In an ESOP,the organization distributes shares of stock to its employees by placing the stock into a trust managed on the employees' behalf.ESOPs carry more risk for employees because problems with the organization's performance can take away significant value including retirement funds if the ESOP is set up to hold retirement funds.

How Do Employee Stock Ownership Plans (ESOPs)differ from Stock Option

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