How Does a Company Share Ownership Work with an ESOP? ~ Insurance Academy

Taken from Finansialku.com, there are 5 ways to own company shares with ESOP (employee stock option program), namely:

Stock Grants
The provision of shares is a grant from the company to employees. Shares are given free of charge. Employees pay nothing for the shares they own. Share granting is the simplest type of company share ownership transfer with the ESOP. Generally given to key people in the company as a form of appreciation or employee retention.

Employee Stock Purchase Plans (Direct Employee Stock Purchase Plans)
This type allows employees to buy company shares with certain advantages, such as lower prices (discounts). Employees are allowed to refuse the share purchase program if it is deemed unprofitable or there is a better offer.

Stock Option Plans (Stock Option Plans)
The company gives employees the option to buy company shares at a certain price and for a certain period. Options are rights not obligations. If the stock price of the company (public company) is below the market price, employees can buy the shares.

Employee Stock Ownership Plans (ESOPs)
This program is a form of retirement program. The scheme is that the company will ask a professional investment manager or fund manager to invest in company shares, then the profits are given to employees. The employee stock ownership plans (ESOPs) program was created by Kelso.

Phantom Stock and Stock Appreciation Rights (SARs)
This program allows employees to gain economic benefits from share ownership without the actual transfer (transfer) of shares. This SAR program is a grant from the company to employees to receive cash in the amount of a certain price increase of the company’s shares in the future.

If your company offers an ESOP, which type do you get? Please share on this blog through the comments column.

Source: My Finance