Enter the total number of shares offered by the ESOP and the price of each share to determine the value of the ESOP.

ESOP Formula

The following formula is used to calculate the value of an employee stock ownership plan.

ESOP = TSO * PPS

  • Where ESOP is the total value of the employee stock ownership plan ($)
  • TSO is the total number of stocks offered in the plan
  • PPS is the total price per share at time of receiving the stocks ($/share)

What is ESOP?

Definition:

An ESOP, an employee stock ownership plan, is a benefit offered to some employees of companies that provide those employees with a number of stocks in the company.

Those stocks can be issued immediately or held for a later date.

Providing employees with part ownership in the form of stocks helps align the interests of the shareholders with the interest of the employee since the employee is now a part-owner.

How to calculate ESOP Value?

Example Problem:

The following example problem outlines how to calculate the value of an ESOP.

First, determine the total amount of stocks offered by the plan. In this example, the plan offers 1000 stocks.

Next, determine the price per share of the stock at the time of ownership/sale. In this case, the stocks are worth $500.

Finally, calculate the total value using the formula above:

ESOP = TSO * PPS

ESOP = 1000 * 500

ESOP = $500,000.00