Employee Stock Option Plan
Companies manage and hire top talent with ESOP (Employee Stock Option Plan)!
It is an employee benefits scheme under which the company encourages the employees to acquire ownership in the form of shares at a predetermined rate. Usually, companies issue ESOP to employees to make them stay with their organization for a long time. It motivates the employees to perform better and offer their loyalty to the company.
Suppose an employee receives 400 shares. On completion of every 1 year, 100 shares will be vested. The valuation of the shares increases with the valuation of the company. This also keeps a check on the attrition rate.
Why should we use ESOP?
- ESOPs are a tax-favored strategy that delivers fair value for shareholders.
- Employee Stock Option Plan allows for a “low and slow” ownership transition.
- ESOPs benefit the people who play a constructive role and remain in the company for a long time
- It creates tax-favored independent and sustainable companies.
- The Employee Stock Option Plan creates and preserves a legacy.
Benefits of Employee Stock Option Plan
Attract Top Talent
You may not be able to match their current salary, but an offer of shares in your company will be enough to attract the best talent.
The better your business performs, the better your most talented employees will get paid. There's no better way to motivate them.
Keep Them Longer
The employees to whom shares have been allocated are almost certain to complete the four to five years you have defined as vesting period.