Question

6) What is meant by Employees Stock Option Plan ?

Answer 1

Dear Student


Employee Stock Option is a plan where the company's whole-time directors, officers and employees get an opportunity of purchasing their own company's shares at a predetermined price in future. The price at which these shares are offered is usually lower than the market price. Employee Stock Option Plan is a right and not an obligation. These shares are offered to employees as a part of compensation. However, there is locking period of minimum one year, i.e. shares issued under this scheme cannot be disposed-off within one year from the date of allotment.



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