Employee Stock Option Plan or Employee Stock Ownership Plan, abbreviated as ESOP, under the Indian system, enables employees of a company to purchase a certain number of shares of that company.

The price of the stock, referred to as Exercise Price, is either pre-decided at a lower rate than their existing market value or an employee is offered a certain percentage of his/her monthly stipend in the form of company’s stocks.

It is an efficient tool that improves remuneration mechanism and employee retention.

ESOP Glossary Terms

• Grant Date:The day on which the employer and employee decides to enter into an agreement on owing shares at a future date
• Vesting Date:The day on which an employee is entitled to purchase shares of the company that has employed him/her basis mutually agreeable terms and conditions
• Vesting Period:The duration between the Grant Date and the Vesting Date
• Exercise Period:The period, after shares having been vested, when an employee is eligible for buying the same shares
• Exercise Date:The day on which an employee exercises the option

• Exercise Price:This is the price at which an employee may exercise the option. Exercise price is usually lower than the existing Fair Market Value (FMV) of the share.

What we offer

• Framing of scheme of ESOP in compliance with ESOP Guidelines issued by SEBI
• Inroduction of scheme to employees and underlines the taxability aspect and the prons and cons of the same
• Advising about the perquisite aspect and the capital gain aspect
• Disclosure requirement
• ESOP from Employer point of view and employer point of view