ESOP VS SWEAT EQUITY– A COMPARISON OF BENEFICAL IMPACT TO EMPLOYEES-A STUDY WITH SPECIAL REFERENCE TO CHENNAI, HYDERABAD & RAJASTHAN
DOI:
https://doi.org/10.61841/469n5m50Keywords:
ESOP- Employees Stock Option Plan, SWEAT EQUITY – SE, SEBI- Securities and Exchange Board of India, AGM – Annual General Meeting, FMV – Fair market value,, IPR – Intellectual Property Rights, EGM- Extraordinary General MeetingAbstract
Employees Stock Ownership Plan (ESOP) are given in the nature of Incentive and retention plan and these are issued to employees and officers. These options are issued with conversion right at a pre-determined price and the issue price can be less than the intrinsic value of the shares. SWEAT EQUITY Shares (SE) are issued as consideration for creation or transfer of IPRs to the company or as other value addition these are issued to the employees, Officers and Directors of the Company. These shares are issued at discounted price or even free for know-how and services to the company. ESOP is granted to employees normally in the Senior Management level even though such contributions arise from grass root level and there is no review mechanism for this grant either by the Internal and External auditors or by the Regulator viz., SEBI which is again like performance appraisal resulting in favoritisms and demotivation among the employees. In order to understand the perquisite which is beneficial for the employees between ESOP and SE, this study was conducted in the Cities of Chennai, Hyderabad & Rajasthan in India and primary data were collected from 374 employees working in Manufacturing, Banking, IT & ITES, Construction / Real Estate and FMCG sectors. . Both Primary and secondary data were collected. It was found that 301 respondents were found to be allotted with ESOP and SE and in between the two majority of them were found to be with ESOP and the balance of 73 respondents were not allotted any shares. The results reveal that for the purpose of Job security, the Junior level and Middle level management has agreed that, there exists a review mechanism both Internal and Regulatory but whereas the Senior Management is always sail with the Tactical Management and Board in order not to lose any benefit.
Downloads
References
1. Amitabha Mukharjee , 2015,Indian Accounting Standards ( Ind AS ) and IFRS byTaxmann publication.
2. A study on Overview of Employee Attrition Rate in India by Rashmi Farkiya, Assistant Professor, Pioneer Institute of Professional studies, Indore, 2013
3. “Difference between SEshares and Employee Stock Option Plans.” Finance Nectar. N.p., 05 June 2013. Web. 07 Feb. 2017.
4. Dr G.K. Kapoor and Sanjay Dhamija ,2015,Taxmann’s Company Law and Practice,Taxmann Publications Pvt Ltd , New Delhi.
5. Dr.G. Sridharan, Amaravathi.M, 2011, ESOP Design Pratices in Indian IT &
6. ITES and Pharmaceutical Industries.
7. Dr. Ratna Sen, 2012, Employee Participation in India, Industrial and Employment Relations Department.
8. “Employee Stock Option – ESO.” Investopedia. N.p., 14 Sept. 2015. Web. 07 Feb. 2017. Goswami, B. K., & Jha, S. (2012). Attrition issues and retention challenges ofemployees. International Journal of Scientific & Engineering Research, 3(4), 1-6.
9. Ranjan, R. (2014). Employee turnover and Retention strategies in non profit organizations in India: an empirical study.
10. “SEvs ESOP.” EsopOnline.in. N.p., n.d. Web. 07 Feb. 2017.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
