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ESOP (option pool / plan)

Also called: employee stock option pool, employee share option plan

In one line

In startup usage, the pool of shares (and the plan) a company uses to grant stock options to employees.

In plain English

In startups, 'ESOP' usually means the employee option pool and the plan governing it — the reserved equity your grant comes from. (In the US, 'ESOP' can also mean a formal retirement trust, which is different.)

If you were explaining it to a 5-year-old

The club's whole chocolate-reward scheme — the jar of squares set aside, plus the rules for sharing them with helpers.

Why it matters when you sell

The size of the ESOP pool affects dilution and the fully-diluted count your ownership is measured against.

Related terms

Option poolEquity incentive planDilutionFully diluted shares

Put it to use

How ESOP allocation works

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.