Re-evaluating ESOPs in times of the COVID-19 pandemic

Employee stock option plans (ESOPs) are a key part of the employee benefits offered by companies today. Start-ups, in particular, use ESOPs as an effective recruitment tool to attract and retain talent. However, employers and employees often do not fully understand the terms and implications of such stock option schemes. From an employer’s perspective, such a scheme enables them to offer an attractive compensation package while keeping the cash component of the employment offer low. It also serves as a motivational tool by ensuring that employees have “skin in the game”.

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