An employee stock ownership plan is a well-defined-contribution employee benefit plan designed to invest primarily in the sponsoring employer’s stock. In other words, ESOPs are meant to provide advantage to both the employee as well as the employer, in which an employee mainly invests in the stock of the sponsoring company by purchasing a fixed number of shares of the company at an amount that is lower than the market value and then vest it after certain number of years, known as option period. The idea that employees should have an ownership stake in the company led to the emergence concept of the Employee Stock Option Plan (ESOP).
The objective behind the introduction of ESOPs is to provide an incentive to attract, retain and reward employees of the company and motivate them to contribute towards the company’s growth and profitability. However, ESOP shares
An option in stock option plan gives the employee, the choice to purchase the shares of the company on the fulfillment of the
But the question is can ESOPs be transferred? The option granted to employees shall not be transferable to any other person, pledged, hypothecated, mortgaged or otherwise encumbered or alienated in any other manner.