An Employee Stock Ownership Plan (ESOP) is a scheme through which a company grants its employees the right — but not the obligation — to purchase the company's shares at a pre-determined exercise price (typically set at or below the market price at the time of grant) after a specified vesting period, rewarding long-term loyalty and aligning employee financial interests with shareholder value creation. In India, ESOPs for listed companies are governed by SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The key milestones in an ESOP cycle are: grant (options are awarded), vesting (options become exercisable after a lock-in), exercise (employee pays the exercise price to receive shares), and sale (employee sells shares in the open market). Under Ind AS 102, the fair value of ESOPs is recognised as an employee compensation expense over the vesting period, reducing reported profits. For investors on Ventura Securities, ESOP disclosures in annual reports — including total options outstanding, exercise prices, expiry dates, and dilution impact — are important for understanding true economic earnings per share and the potential equity dilution from option exercises.
For android only
