The Development And Experience Of ESOPs In United States

Employee stock ownership plans ( ESOPs ) plays an important role in the development of Employee Ownership in United States.Employee stock ownership plan concept was developed in the 1950s by lawyer and investment banker Louis Kelso,who pointed out that everyone should not only obtain income from his labor,but also he should have right to get income from capital. Louis Kelso and his followers created a kind of law system under which people can share in owning capital-producing assets. ESOPs has become a standard plan for employee ownership plan in western countries. Although ESOPs in United States is recognized as a benefit that employers may provide to their employees under ERISA of 1974,the Tax Reduction Act of 1975 and later legislation,it does not make promise to offer some kind of fixed income or bonus to employees. Employee income will be related to the return in their investment to the company,which will be very incentive to the employee.At present,China' s economic reform has entered into critical period. ESOPs had attracted great attention from Chinese government and enterprises in last decade. In recent years,ESOPs has been widely experimented. We have to note that there are several drawbacks in practice of ESOPs in China for the time being.Compared with China,the United States has many years experience to carry out ESOPs and it is sure that China can learn a lot from American experience in how to develop this plan in more healthy and normative way.I did some research in status quo and background of ESOPs development in USA in order to summarize some experience in how America developed their ESOPs effectively and healthily. I hope that American experience can be useful to perfect ESOPs in China.The article comprises the following parts:Preface The part briefly introduces background of development in American ESOPs along with his definition and essence as well as explanation of ESOPs in China.Chapter 1 American ESOPs rise and development The part introduces the history and characteristics of ESOPs in United States as well as their genres in practice.Chapter 2 American ESOPs background in theory The part focuses on theories American economists explored in ESOPs including Binary Economics,Proxy Agent Theory,Human Capital Theory and Share Economy Theory as well as Democratic Economy Theory.Chapter 3 ESOPs practice in United States The part generalizes the following aspects of American ESOPs:1. Characteristics in fulfilling ESOPs in United States.2. Companies performance after companies setting up ESOPs?3. Why did companies set up a plan like ESOPs?4. What are the impacts that ESOPs give to the United States?5. What problems and drawbacks do ESOPs exist that America carried out ESOPs?Chapter 4 how US government and social community support the development of ESOPs? The part introduces the action that US government and social community took to push ESOPs. It is sure thatit is the government that makes ESOPs develop rapidly in USA.Chapter 5 ESOPs in China The part briefly makes an introduction in development of ESOPs in China at first,which covers following aspects:1. Theory background in Chinese ESOPs2. Status quo of ESOPs including stages in development,ESOPs situation in practice and their performance3. The efforts the government made to push the movement of ESOPs in China,particularly in laws and regulations even they were not successful completely up to now.The last part in this chapter focuses on the existing problems of fulfilling ESOPs in China at present and some suggestions which are given to perfect its movement in China according to US experience. Summary The part summarizes some experience in development of ESOPs in USA and points out that China has to take some action to regulate ESOPs movement such as establishment in law system of ESOPs and building a set of unified and accordant regulation and tax incentive rules in ESOPs.