Know about four types of share-based employee incentives6 min read 23 Aug 2022, 11:11 PM IST
Before accepting such incentives, one must check details like vesting conditions, exercise period, restrictions
It is the sort of feel-good stories that everybody likes: employees becoming millionaires after their companies list on the stock markets. It happened recently with the stock market debut of Zomato and US-based Freshworks, with those holding Employee Stock Ownership Plans (Esops) becoming rich overnight. Esop is a share representing the ownership of a company that is given to employees at a price lower than its fair market value (FMV). Even well-established companies, such as Infosys and HDFC Bank, have created wealth for their employees by issuing Esops. While there are enough examples where Esops have not worked (as in the case of Yes Bank), one cannot deny that Esops are a great way to create wealth for an employee. However, Esops are not the only way companies incentivize employees.