Design, value, implement and administer employee stock plans that attract and retain talent and stay compliant. Our ESOP advisory services cover plan design, Companies Act and SEBI compliance, accounting, valuation, employee taxation and cross-border FEMA requirements.
An Employee Stock Option Plan is a scheme in which a company gives employees the right to acquire its shares, or ownership-linked incentives, at a pre-determined price after a vesting period.
ESOPs have become a vital tool for attracting talent, rewarding performance and retaining key people. Start-ups, listed companies and mature businesses all use them to align employees with long-term value creation.
Choosing the right plan is not simple. It depends on the company's stage, industry, the demographics and skills of its people, its culture and its future funding or exit plans. Each choice then carries consequences under company law, securities law, accounting standards, income tax and, for cross-border plans, foreign exchange regulations. We help you formulate, design and implement a plan that meets your objectives and complies with all applicable laws.
We advise on whether ESOPs or an alternative instrument best suits your goals, in line with the applicable laws and regulations.
| Instrument | How it works | Employee pays? | Typically suits |
|---|---|---|---|
| ESOP | Option to buy shares at a fixed exercise price after vesting | Yes, the exercise price | Start-ups and growth companies |
| ESPP | Employees buy shares, often at a discount, through a purchase plan | Yes, the purchase price | Listed and mature companies |
| SAR | Employee receives the increase in share value, in cash or shares | No | Companies that want to limit dilution |
| RSU | Shares granted outright once vesting conditions are met | Usually no, or a nominal amount | Multinationals and listed groups |
We advise on ESOPs versus ESPPs, SARs and RSUs, the size of the pool, eligibility, vesting schedules, exercise periods and treatment on exit.
We advise on accounting at the time of grant and on the annual expense to be recognised, under Ind AS 102 or the ICAI Guidance Note on share-based payments, as applicable.
Plan type, pool size, eligibility, vesting, exercise price and exit terms are agreed with management.
Board approval, a shareholders' special resolution with disclosures, and filings with the ROC.
Grant letters are issued, the options are valued at fair value, and the accounting expense begins.
A minimum one-year vesting period applies under the Companies Act. Schedules and leavers are tracked.
The FMV is valued, the perquisite is computed and TDS deducted, shares are allotted, and PAS-3 is filed.
Capital gains for employees, buy-backs or liquidity events, and treatment of unvested options.
Hiring senior leaders with equity? Our executive search team can help structure competitive offers.
Tell us about your company and your goals. Our team will recommend the right instrument and outline the compliance roadmap, at no cost and with no obligation.
Book a Free ESOP ConsultationShare a few details about your company. We usually respond within one business day.
