ESOPs have proven to be an efficient way to incentivize the employees, along with their salary. ESOPs inculcates a sense of ownership among the employees, which in turn enhances their performance as an individual and a group. This scheme also allows employers to hire better talent at a lower salary, and compensate them with a higher stick pool. Our team of experts can assist you in structuring an ESOP scheme that caters to your business interests.
Our customized ESOP schemes are in compliance with the applicable laws and discuss all the essential terms in detail. We analyze the client requirements related to important factors such as cliff period, treatment of vested shares on termination/resignation of an employee, duration of the exercise period, suitable vesting schedule, etc. to come up with the most appropriate policy.
An ESOP's equity price is normally established on a yearly basis by a competent valuation business in collaboration with the plan's trustee. These organisations are experts in estimating the worth of ESOP-owned enterprises. Many variables influence the value, includingthe firm's present and future performance, the performance of comparable publicly listed companies, the forecast for the industry and location in which the company works, and the broader economic outlook.
The ESOP trust, a separate organisation formed for the ESOP, holds the ESOP's assets, which are mostly corporate shares and cash. Each employee's share of ESOP assets is documented in an ESOP account set up in his or her name.
The ESOP trust is managed by the trustee. He or she is the plan's representative and ensures that the plan is run in their best interests. The trustee also determines the stock's yearly price with the assistance of an independent valuation firm.