Stocks Perference Essay Example | Topics and Well Written Essays - 500 words

Stocks Perference - Essay Example Also, the company might find it difficult to pay out high interest, as the current global economic scenario is quite uncertain and might turn for worse any day. Once the management trainees are hired, we could decide on a sound strategy and growth pattern for the company and subsequently go in for the public issue after a period of three months at least. This time is required for the trainees to familiarize themselves with the working of the company and think about ways to improve the sales and profits. I would however not recommend having any of the new management grads on the board as the board members must be experienced people with excellent track records. Employee Stock Option is a wonderful tool to retain talented employees and keep them happy. No doubt, this perquisite could be offered to the employees, especially the management trainees who join the company in the next few weeks. â€Å"Technically, under ESOP, a company offers its employees the chance (or option) to purchase a certain number of shares at a future point in time. Generally, these shares are offered at a pre-determined price, which as per the company’s expectations would be lower than the market price at the time when the employee can exercise the option (choose to buy). Of course, the reverse could be true, in which case the options have no value at all.†[Sify Business] In case the employee chooses to leave the company before the vesting period, the stock option ceases to exist and the employee cannot benefit from it. We could keep the vesting period as five years to encourage the trainees to keep working with us. Another advantage with ESOP would be the tax benefit for the company. Since the stocks would be a part of the employee’s compensation package, the employee would have to pay the tax on the amount and we would be saving that amount. If a substantial part of the salary is offered as ESOP, we could be sure of the dedication of the