SEMINAR ON HRMTopic: Employment Stock Ownership Plan

Presented byJibson Abraham

VargheseMBA II Semester

ESOP

Under Stock Option Plan, The Eligible Executives Are Allotted

Company’s Shares (Sweat Share) Below The Market Price.

Features of ESOP

• It is a voluntary in nature.

• It helps to buy shares or stock at a stated price or in the

present at a price lower than the market price.

• It is intended to procure and hold talented professional

employees.

Conti…

• It makes the employee a part-owner of the company where

he is working.

• Mutuality of interest is created between the individual and

the company.

• Stocks are held in trust until employee choose to withdraw

from the plan or leave the company.

Advantages of ESOP

• It promotes mutuality of intrest between the employee and the

employer.

• The employee get an opportunity to attend the meetings of the

shareholders and know about future plans.

• It promotes efficiency and security on the part of the employees.

• Worker’s income is supplemented by dividends.

• Gains to the management.

In India

• Employment Stock Option Scheme (ESOS)

• Participation of employees in the shareholding is

encouraged.

• Allots shares on:

i. Every financial year.

ii. Reservation in fresh issue.

Conti…

• The SEBI guidelines for Disclosure and Investor protection

explain that ESOS is a voluntary scheme on the part of the

company to encourage participation in the company.

• 5% reservation for the employees

• Max. limit- 200 shares

• Membership restricted to permanent employees.

References

• The Economic Times, Thursday 14 May.

• T.P Ghosh, Compensating Employees by ESOP, Express Investment Week, New Delhi.

Thank You