# What is ESOP? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Operations  
> **Canonical Citation:** [https://spidits.com/startup-glossary/esop](https://spidits.com/startup-glossary/esop)

## Definition
An Employee Stock Ownership Plan (ESOP) is a corporate structure that allows employees to acquire ownership interest in the company through stock options.

## Architectural Mechanics & Deep Dive
An Employee Stock Ownership Plan (ESOP) is a corporate structure that allows employees to acquire ownership interest in the company through stock options allocated from the option pool.

## Industry Applications & Real-World Use Cases
Talent recruitment and equity incentive structures

## Frequently Asked Questions

### Why do startups use ESOPs?
To align employee incentives with company growth and compete with large tech firms on compensation.

### Who administers the ESOP?
The board of directors allocates options from the option pool created for the ESOP.

## Related Terminology
- [option-pool](https://spidits.com/startup-glossary/option-pool)
- [vesting](https://spidits.com/startup-glossary/vesting)
- [strike-price](https://spidits.com/startup-glossary/strike-price)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*