How is an Employee Ownership Trust different from an ESOP?

Both models create employee ownership, but they're designed differently. An Employee Ownership Trust (EOT) holds company shares in a trust for the benefit of employees, while an Employee Stock Ownership Plan (ESOP) is a qualified retirement plan regulated under ERISA.

EOTs generally offer greater flexibility in transaction design and simpler, lower-cost ongoing administration, while ESOPs are designed primarily to help employees build retirement wealth through company ownership.

For a fuller comparison of structure, cost, tax treatment, and timeline, see ESOPs vs Employee Ownership Trusts.