Eli5: What is an ESOP? And what exactly does “vesting” mean? What are the benefits AND consequences to employees with an ESOP benefit?
The company I’m at is introducing ESOP and it’s caused a whirlwind of opinions from coworkers. I tried to google it, but stocks and vesting are the one thing I could never grasp.
Thank you ☺️
In: 7
Someone else will have to give you the scoop on an Employee Stock Ownership Plan (i just googled it) but vesting is a required length of time until you become ENTITLED to a benefit.
So if i had to guess, your company is applying a vesting rule to either do some kind of company match and/or to let you keep the shares if you leave the company.
Ive seen “vesting” periods of 3 years or 5 years for “company match” dollar amounts when it comes to 401k.
It means if you leave the company before the X year “vesting” period, you are NOT vested (read: entitled/eligible) for whatever that extra benefit is (more shares, more money, etc).
Im sure they gave you SOME kind of information pertaining to what the vesting period is?
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