# ESOP

*Retirement & Benefits — Finicade finance glossary*

An ESOP is a retirement plan that invests primarily in the employer's own stock, often used to transition ownership when a founder exits. Employees get a stake without buying it and the seller gets tax advantages. The risk is undiluted concentration: salary, job and retirement all depend on one company, which is precisely the exposure Enron employees discovered when the shares and the payroll vanished together.

**Also known as:** employee stock ownership plan, employee ownership

**Related terms:** [Vesting](https://finicade.com/glossary/vesting), [Concentration Risk](https://finicade.com/glossary/concentration-risk), [Restricted Stock Units (RSUs)](https://finicade.com/glossary/restricted-stock-units), [Employee Stock Purchase Plan (ESPP)](https://finicade.com/glossary/employee-stock-purchase-plan), [Defined Contribution Plan](https://finicade.com/glossary/defined-contribution-plan)

Source: https://finicade.com/glossary/esop