An employee stock plan is a structured way for employees to invest in their employer's company. There are multiple types of employee stock plans that are offered in the United States. One of them can lead to employee ownership of the company.

Stock Option Plan

This gives employees the right to buy stock at a special price during a limited time period. There is typically a waiting period before the employee is vested in the option and can exercise it. During that period, if the price of the stock goes up, the employee can purchase the stock at a favorable rate that is less than the open market price. For example, an employee might be given an option to buy 50 shares of stock at $25 each. Once the vesting period is over, if the price of the stock is $50, the employee can buy the stock for $25 and sell it for $50, pocketing a nice profit in the process. If the price of the stock has declined, the employee does not exercise his option.

Employee Stock Purchase Plan

An Employee Stock Purchase Plan offers employees the opportunity to purchase stock, typically through payroll deductions, during a limited offering period, which may be as long as 27 months. The employees are usually given a discount of 15% on the market price. They can either hold the stock for further appreciation, or sell it immediately to take their profits. These are typically set up as Section 423 plans, meaning that all employees with a certain time of service must be allowed to participate as a benefit of employment.

Section 401(k) Plan

This is a retirement plan. It will offer several different investment options from which the employee can choose. If offered, the 401(k) program must be made available to all qualifying employees. The company often makes a matching contribution to the employees' accounts. Its own stock may be an investment option in the plan. Taxation of the purchase is deferred until retirement, when the stock is sold and funds are withdrawn.

Employee Stock Ownership Plan

Under this plan, employees gain ownership and control of the company. The company typically borrows money to buy back all of its stock. It then contributes the stock to the Employee Stock Ownership Plan. The company pays off the loan with its operating revenues. As with other forms of investment plans, employees gradually vest in their accounts. They receive the financial benefits of the investment when they leave the company.