Leveraged Employee Stock Ownership Plan (LESOP)

Leveraged Employee Stock Ownership Plan (LESOP) - Leveraged Employee Stock Ownership Plan (LESOP) is an equity compensation system in which the sponsoring company typically leverages its credit to borrow money, which it then uses to fund the plan, in order to purchase company shares from the company's treasury. The shares used are for the purposes of the stock ownership plan, and the company pays back the original loan with annual contributions, as it is able. Typically, companies choose to use stock ownership plans or equity compensation systems I order to tie a portion of their employee interests to the bottom-line share price performance of the company's stock.