Employee Stock Option Plans (ESOPs) & Employee Stock Purchase Schemes (ESPSs) are employee benefit plans, which makes the employee of the company owners of stock in that company.
Stock options are the instruments that are offered to employees, allowing them to buy a certain number of shares in the company at a specific price. This price could either be lower than the current market-price of scrip-in which case their gains are immediate-or the same, whereupon future jumps in the share-price will show up as profits for them. There has to be a gap between the announcement of the ESOP and its coming into effect. You also have the freedom to specify how many shares an employee gets, which employees get them, and when the ownership is actually transferred.
ESOPs & ESPSs are unique employee benefit plans and are fast replacing cash incentives as a method to reward and retain employees.
The spirit of ESOP is that it would give the employees a share in the wealth of the company and infuse a sense of ownership & thence loyalty. This helps retaining talented and skilled employees, especially in today’s scenario when the employee turnover and churn is high. It also improve the productivity and performance of the Employees.
The scheme extends to eligible employees in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines. The board of directors of the Company would decide the entitlement of Employees based on his/her level, grade and seniority
THE MAIN OBJECTIVES OF THE SCHEME: • An incentive to the Employees for achieving the Company’s medium/long term goals. • An incentive to the Employees to maintain a long association with the Company. • Motivation of Employees. • Employees’ participation in shareholding of the Company. • Bring long-term value to the shareholders. Motivate Employees to drive Company’s performance.
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