What is the difference between a stock option plan and an employee stock ownership plan?

What is the difference between a stock option plan and an employee stock ownership plan Introduction: The World of Corporate Compensation Hello everyone! Welcome to our video on the differences between stock option plans and employee stock ownership plans. In the realm of corporate compensation, companies employ various strategies to reward and incentivize their employees. Two popular approaches are stock option plans and employee stock ownership plans (ESOPs). While both involve company shares, they have distinct characteristics and serve different purposes. Let's dive in! Stock Option Plans: A Path to Future Ownership A stock option plan is a compensation structure that grants employees the right to purchase company shares at a predetermined price, known as the exercise price, within a specified timeframe. This timeframe is often referred to as the vesting period. The exercise price is typically set at the market value of the shares on the grant date. The idea behind stock options is to provide employees with an opportunity to benefit from the company's growth and success. As the company's stock price rises, employees can exercise their options, buying the shares at the exercise price and potentially selling them at a higher market price, thus realizing a profit. Employee Stock Ownership Plans (ESOPs): A Stake in the Company