An ESOP are required to appoint a trustee to act as the plan fiduciary. Among other things, it is not possible for senior employees to receive more shares or for ESOP participants to have no voting rights. Since ESOP shares are part of the employees benefits package, companies can use ESOPs to keep plan participants focused on corporate performance and share price appreciation. By giving plan participants an interest in seeing the companys stock perform well, these plans supposedly encourage participants to do whats best for shareholders, since the participants themselves are shareholders. Also, an interesting point to note is that there are ESOPs and ESPPs. ESOPs provide the stock or shares at no cost to employees. ESPPs require participants to contribute funds to purchase shares of stock, though at a discounted rate. ESOPs are qualified defined contribution retirement plans. Shares cannot be sold or distributions taken before the age of 65, even if you have left the company or retired early, and the money in the account is not taxed until the distribution is taken. ESPPs are voluntary stock purchases made with after-tax dollars. They are subject to capital gains tax when sold, which can be as soon as participants meet the vesting requirements and barring a holding period. Corporations that have these types of non-compensatory share purchase plans enable employees to buy shares of stock, usually at a discount from market price. A share purchase plan is non-compensatory if the plan conveys no compensation to employees.

There are criteria that must be met for a share purchase plan to be non-compensatory.

Any thoughts on this topic?

Can you explain more regarding these requirements?