The Role of Employee Stock Ownership Plans in Compensation Philosophy and Executive Compensation Arrangements

What effect, if any, does an ESOP have on a company's compensation philosophy and executive compensation plans and programs? Our firm recently conducted research in order to determine whether or not an ESOP materially alters compensation philosophy and executive compensation levels at public companies at the executive level. ESOP plans were introduced in the mid-1950s as an efficient form of employee stock ownership. They came under the jurisdiction of ERISA in 1974 and have existed in their present form ever since. Although these plans do have some very real limitations, they can also provide employees with a substantial motivation to save for their retirements