Leveraged Employee Stock Ownership Plan (LESOP)

Salaries & Compensation Financial Terms Dictionary

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The Employee Leveraged Stock Ownership Plan (LESOP) uses borrowed money to fund the ESOP as a form of equity compensation for employees.

The company borrows against its assets and then repays the loan used to fund the ESOP through annual installments.
The advantage of LESOP is that the company does not need to spend cash in advance to fund ESOP.
However, since it involves taking on a large amount of debt, it should be done with care.