Employee Stock Option Plan is really a benefit plan for employees making them owners of stocks from the company.
Definition: Employee Stock Option Plan (ESOP) is really a benefit plan for employees making them owners of stocks from the company. ESOPs have several features that make them unique in comparison with other employee help plans. Most firms, both at home and abroad, are utilising this scheme as an essential tool for you to reward and maintain their employees. At present, this form connected with restructuring is most prevalent within it companies where manpower will be the main asset.
Outline: Abroad, ESOP (where this 'O' often is short for ownership) is seen when employees buy in the stock of an owner or promoter who's relinquishing charge. In India, ESOP is employed largely to motivate employees to do their best and therefore, help the company enjoy lower member of staff turnover and maintain its talent pool area. These two uses probably be the cause of over two-thirds off ESOPs now on the market, and their numbers are hoped for to increase after a while.
Interestingly, many companies in foreign countries use ESOPs as being a technique of business finance for various purposes -- for you to finance expansion, to make an acquisition, for you to spin off any division, to take a company private, and many others. This has yet to catch about in India, perhaps because this scale of ESOP until now is too small for a number of these uses.
So far since the future of ESOPs in India is involved, as more and even more companies realise the requirement to retain their best talent in the world which could be dominated by companies with the best intellectual money, this management technique will be the phenomenon of the brand new century.
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