3. Employee Stock Ownership Plan Providing employees the ownership of stocks A Profit Sharing Plan ‘Stock option’ -right or privilege to buy stock under an offer continuing for a stated period of time at a certain price. Introduction
4. Aimed to create “wealth” Attract & Retain talent A thank-you for past loyalty and performance Promote employee ownership culture Incentive to drive future value Industry practice (sometimes) The Objective
6. Redefine market price as the latest available closing price prior to the date on which auctions are granted Consider the exchange on which there is highest trading volume Appoint a registered merchant, banker for implementation Accounts of the company are prepared as if company is administrating ESOP SEBI Guidelines
7. ESOS – Granting employee the option to acquire the shares of the company at a predetermine price ESPS – Shares are directly allocated at the time of a public issue(may be at a discounted price) SARS – Shares are allotted and employee is free to exercise his option after vesting period. He can sell them after locking period.(Cashless transaction for employee) Sweat Equity – Shares issued for a consideration other than cash ESOP Types
10. Conceptualizing Scheme Valuation of firm’s stock by appraiser Analyze effect on existing stockholder Prepare Plan for “Repurchase obligation” Financial Modeling Employees Interaction Drafting of Legal Documents Implementing ESOP