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Esop As Long Term Incentive


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Esop As Long Term Incentive

  1. 1. ESOP - Long term Incentive<br />Presented By<br />
  2. 2. Team - Elite<br />
  3. 3. Employee Stock Ownership Plan<br />Providing employees the ownership of stocks<br />A Profit Sharing Plan<br />‘Stock option’ -right or privilege to buy stock under an offer continuing for a stated period of time at a certain price.<br />Introduction<br />
  4. 4. Aimed to create “wealth”<br />Attract & Retain talent<br />A thank-you for past loyalty and performance<br />Promote employee ownership culture<br />Incentive to drive future value<br />Industry practice (sometimes)<br />The Objective<br />
  5. 5. ESOP in India<br />
  6. 6. Redefine market price as the latest available closing price prior to the date on which auctions are granted<br />Consider the exchange on which there is highest trading volume<br />Appoint a registered merchant, banker for implementation<br />Accounts of the company are prepared as if company is administrating ESOP<br />SEBI Guidelines<br />
  7. 7. ESOS – Granting employee the option to acquire the shares of the company at a predetermine price<br />ESPS – Shares are directly allocated at the time of a public issue(may be at a discounted price)<br />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)<br />Sweat Equity – Shares issued for a consideration other than cash<br />ESOP Types<br />
  8. 8. Capital Appreciation<br />Incentive Based Retirement<br />Tax Advantages<br />Company reduces it&apos;s tax liability<br />Advantages<br />
  9. 9. Dilution<br />Fiduciary Liability<br />Liquidity<br />Stock Performance<br />Disadvantages<br />
  10. 10. Conceptualizing Scheme<br />Valuation of firm’s stock by appraiser<br />Analyze effect on existing stockholder<br />Prepare Plan for “Repurchase obligation”<br />Financial Modeling<br />Employees Interaction<br />Drafting of Legal Documents<br />Implementing ESOP<br />
  11. 11. Thank You For Time<br />