A standard ESOP will see existing stockholders sell all or some portion of their shares to the program for allocation to employees. Qualifying employees are allocated shares according to their part of total payroll. The vesting period (the time an employee must work for the company in order to achieve stock ownership) is three to five years, and employees must sell their shares back to the ESOP when they leave the company for another employer or retire.
There are other types of employee ownership — i.e. profit sharing, worker cooperatives and stock purchase programs — but the ESOP, according to the National Center for Employee Ownership’s list of the largest majority employee-owned companies is the most popular.
