Startup Law
ESOP (Employee Stock Option Plan)
A scheme allowing a company to grant its employees the option to buy company shares at a predetermined price after a specified vesting period.
ESOPs are commonly used by startups to attract and retain talent without requiring large upfront cash compensation, giving employees a stake in the company's future growth if they stay through the vesting schedule.
The terms — vesting period, exercise price, and what happens to unvested or vested-but-unexercised options if an employee leaves — are set out in the company's ESOP scheme document and individual grant letters.
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