Employee stock ownership plans (ESOPs) are supposed to align employee and company interests and in theory decrease risk. But as an employee, you actually materially increase risk if you get paid stock rather than cash: if your company gets into trouble you lose your job and your savings (stock price drops).When things go well for a company it should take more risk, but ESOPs might make employees take less risk, in essence locking in their profit.

When things don’t go so well a company should reduce risk. But employees, who might feel they are about to lose everything, might gamble with the hopes of saving their jobs and savings.