Glossary
What is an ESOP?
Also known as: Employee stock option plan, Employee stock ownership plan.
An ESOP is a plan that gives employees a stake in the company they work for, most commonly, in startups, a pool of stock options that vest over time and can later be exercised into shares, so the team shares in the value it helps build.
The word carries two meanings. In startup usage an ESOP is an employee stock option plan: a reserved pool of options granted to employees, which vest on a schedule and are exercised at a set price. In the United States it more often means an employee stock ownership plan, a retirement structure that holds shares on employees' behalf.
Either way the mechanics worth tracking are the grant, the vesting schedule and the cliff, and what is vested on a given date. Capstan records equity as effective-dated grants and shows each employee their own vested and unvested units, never a valuation.
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