what is ESOP? Explain any 2 terms associated with ESOP? (3 Marks)

Dear Student,

ESOP refers to Employee Stock Option/Ownership Plan, wherein the company issues shares to its employees at price lower than the market rates, or without any upfront fees. Employees have the option to These options are provided to motivate employees for better performance and provide them with sense of ownership in the company.

Terms related to ESOP are :
a) Grant Date: It is the date when options are granted to the employees.
b) Exercise Period: It is the period within which employees should exercise the option. The date on which option is exercised is called the exercise date.



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An employee stock ownership plan (ESOP) is a qualified defined-contribution employee benefit (ERISA) plan designed to invest primarily in the stock of the sponsoring employer. ESOPs are "qualified" in the sense that the ESOP's sponsoring company, the selling shreholder and participants receive various tax benefits. The 2 terms - (1) Adjustable Taxable Income This is all an individual’s income, from all sources (not just remuneration or salary) plus Fringe Benefits less certain elements. This is defined more fully by the ATO. ; (2) Aggregated Turnover Aggregated Turnover is your annual turnover plus the annual turnovers of any business entities that are your affiliates or that are connected with you.
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