Photo of Sindhushri Badarinath

Director in the General Corporate Practice at the Bangalore office of Cyril Amarchand Mangaldas. Sindhushri advises on India entry strategy, corporate governance, employment and general corporate advisory specializing in employee benefit schemes (including employee stock options and share appreciation rights) and restructuring of employee benefit schemes, executive appointment and remuneration, and business/asset transfers. She can be reached at sindhushri.badarinath@cyrilshroff.com

ESOP Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise

Employee stock options are frequently used as an employee incentivisation and retention tool, given the benefit accrued over time. An ESOP-wrapped compensation is attractive because the gains from the shares acquired on exercise of employee stock options are much higher than the exercise price paid for the options. While the maximum or minimum price payable on exercise of the options is not prescribed by the law – which only lays down the requirement for the price to be accounting-standard compliant –  the price typically ranges from the face value of the share to the fair market value of the share.

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