Stock options grant can be made only when a stock option plan is in place. In India, the three most common ways in which stock option plans are implemented are through Standard ESOP, Trust, and SARs. The journey of an option from grant to exercise varies from plan to plan and so does its administration. So, it’s important to understand which type works best for companies and employees. For clarity on this, we have prepared a chart that provides a comparative view of the lifecycle of stock options under each plan and how it works.
For employers, offering stock options can be an effective way to incentivize employees and align their interests with those of the company. For employees, receiving stock options can provide an opportunity to share in the growth and success of the company, but it is important to carefully consider the tax implications and other potential risks associated with these types of plans.