ESOP's are usually set up as an employee benefit trust; the employees' retirement pension fund is invested in shares of the company. ESOP contributions are tax deductible, so the company basically gets a tax break for its employee benefits. The downside of this is that the employees are totally dependent for their retirement on a single company, rather than many (as with an ordinary pension plan).
Sen. Russell Long (D-LA) managed to use his senior position and powerful connections to push for laws that promoted ESOP's. The immense tax advantages caused ESOP's to be widely adopted. Later, those provisions were eliminated but the ESOP's remain.