Employee stock ownership plans in the United States
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In the United States, there is a widespread practice of employee stock ownership. It began with industrial companies and today is particularly common in the technology sector but also companies in other industries, such as Whole Foods and Starbucks.
Employee Stock Ownership Plans (ESOPs) were developed as a way to encourage capital expansion and economic equality. Many of the early proponents of ESOPs believed that capitalism's viability depended upon continued growth and that there was no better way for economies to grow than by distributing the benefits of that growth to the workforce.[1]
Employee stock purchase plans (ESPPs) are a program run by companies for their employees, enabling them to purchase company shares at a discounted price. These schemes may or may not qualify as tax efficient.[citation needed]
In the U.S., stock options granted to employees are of two forms, that differ primarily in their tax treatment. They may be either:
- Incentive stock options (ISOs)
- Non-qualified stock options (NQSOs or NSOs)