An Employee Stock Ownership Plan (ESOP) is a retirement benefit plan for employees, like a 401(k), but with some important differences.  An ESOP does not accumulate shares of other companies in plan participant accounts, but instead, it invests primarily in the stock of the employer company.  Also, instead of reducing their current salary to build their account value, employees don’t use any of their money to fund ESOP accounts. ESOP employee account value growth comes from the employer’s financial performance, which of course aligns the interests of employee and employer.  Finally, an ESOP can borrow money to buy the sponsoring company’s shares directly from selling shareholders or from the company.