An Employee Stock Ownership Plan (ESOP) is an employee participation plan in which employees can receive company stock as part of their benefits package.
Stock Appreciation Rights (SARs) are a type of equity-based compensation that allows employees to share in the appreciation of a company's stock. SARs give employees the right to receive a payment (in cash or equivilant) in the future based on the increase in the value of a specified number of shares of company stock.
Both plans can be used to align the interests of employees with those of the company and to motivate and retain key employees. However, the main difference in the plans is that one is a benefit package that offers employees preferential pricing for company stock (ESOP), while the other offers employees future cash compensation for increased value of a specified number of company shares (SARs).