Shareholder value in a bank is enhanced when the individuals who
manage and operate the bank have an incentive to maximize
profitability. In order to do this, directors must attract and
retain quality and key employees. There are a number of incentive
options that may be appropriate for bank employees, including an
employee stock ownership plan (ESOP), an incentive stock option
plan (ISOP), a stock appreciation rights plan (SAR) or a phantom
stock plan, non-qualified stock option plans, and restricted stock
plans.
ESOP Plan
An ESOP is an employee benefit plan that provides a
company's employees with an ownership interest in the company.
It creates liquidity for the bank's shareholders as well as
establishes a benefit for the bank's employees. The basic rules
of operation are the same as other qualified retirement plans, but
it differs from other plans in that the primary investment of the
ESOP must be employer stock. Because participants in the plan
