Employee Stock Option Plan (ESOP)

An Employee Stock Option Plan is a compensation structure that grants employees the right to purchase company shares at a predetermined price within a specified timeframe. Organizations implement ESOPs through legal documentation, vesting schedules, and administrative systems that track employee eligibility and exercise rights. This tool aligns employee incentives with company growth, aids in talent retention for startups with limited cash reserves, and creates tax-advantaged wealth-building opportunities for workers.

Employee Stock Option Plan (ESOP) sits under Legal and Compliance for Startups in the Entrepreneurship & Venture domain of the Luminid skills catalogue.

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