The Defects and Values of Employee Stock Ownership Plans

With the development of modem company system, more and more attention is paid to equity incentive in order to improve staffs enthusiasm and creativity. In the process, equity incentive has been divided into some different kinds. This paper focuses on one of them, the Employee Stock Ownership Plans (ESOP) which is for ordinary staff. ESOP has become mature in many countries but has little development in China. This paper tries to reveal the factors that result in the hardly growth of ESOP by analyzing the defects of ESOP as well as Chinese financial and legal situation. In the meantime, we conclude the necessities and values of implementing ESOP by analyzing its theoretical basis and positive effects.