The document discusses employee stock option plans (ESOP). ESOPs allow employees to purchase company shares at a concessional price, earning a capital gain if the market price rises. The objectives of ESOPs are to reward performance, enhance retention, attract talent, reward loyalty, and create wealth for employees. ESOPs are offered to senior, middle, and junior employees at varying percentages. The process involves an HR department creating an option plan, employees accepting and later exercising the option, and shares being issued to the employee's account. To be eligible, an employee must be permanent and not own more than 10% of company shares. ESOPs operate through a trust funded by tax-deductible company contributions distributed
2. Employee Stock Option Plan
Under this scheme employee are
offered the company share at a
concessional price, when the market
price of the share increase the
employee earn consideration capital
gain
5. HR creates
option plan
Employee
accept option
plan
Employee
exercise option
HR approves
exercise
transaction
HR collect
payments
Shares are issued
to the employees
account
6. A permanent employee.
A director of the company who
neither or in directly holds more
than 10% of the outstanding equity
shares of the company
7. It operates through a trust which is setup by
the company.
Tax deducted contribution are distributed to
individual employee accounts within the trust.
Employee with minimum 1 year of service or
1000hours of work in a year is eligible for
ESOP.
8. Shenoy Solution, an IT company.
Has 1,00,000 shares currently priced at Rs.10
The company offers an employee Girish on
1st November 2010, option of shares at Rs.
10,
After two year,
i.e 2012, the price of the share is Rs.40, and
Girish exercise the option he pays Rs. 10,000
and the company issues 1000 shares.
