Final answer:
An atypical leveraged ESOP involves parties such as the sponsoring company, the ESOP trust, lenders for financing, and possibly third-party sellers, with the company contributing to the ESOP trust to repay a loan used to purchase company shares.
Step-by-step explanation:
When discussing atypical leveraged ESOPs (Employee Stock Ownership Plans), we are referring to slightly less common configurations of ESOPs that are structured with debt financing. In a leveraged ESOP, the ESOP borrows money to purchase shares of the company's stock, which are then allocated to employees' accounts. The typical parties involved in an atypical leveraged ESOP may include the sponsoring company, the ESOP trust, lenders that provide financing, and sometimes third-party sellers if existing shares are being purchased. The company makes contributions to the ESOP trust, which it uses to repay the loan over time. As the loan is repaid, shares are released from collateral and allocated to the employee accounts based on formulas that often consider the employee's salary and length of service.