Concept of Employee stock option plan

Employee stock option plan was introduced in USA in 1910. But in India employee stock option scheme came in 1998. In this scheme the employees of the company are allotted the company’s shares below market price generally 10 to 20% or on the provision of installment buying. Under this scheme only permanent employees of the company can enter. This plan is generally for the executives. The employees feel committed to the organization and work for the growth of the organization. It helps in holding the talented employees. However, as per the SEBI guidelines only 5% of the new issue or maximum 200 shares per employee are reserved for the ESOS.

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