ESOP’s re-pricing
ESOP’s (Employee Stock Option Plans) have always been issued as an incentive to retain good employees. In times of rising markets employees gain along with investors hence investors have no grounds for complain for issuing a small percentage of shares as per the approved plan to employees at the price determined as per SEBI’s pricing formula. The price so determined is usually much less than the market price in times of rising stock markets which is inherently beneficial to the employees. The question to be addressed is whether ESOP’s should be re-priced in normal and abnormal scenarios. By normal scenario, I mean in cases where the markets are fairly priced, but a particular company’s price has fallen drastically. This by implication would mean that the company has not performed to expectations. The fact that a company is not doing well economically would imply that the employees are not performing or the management team is not leading the company in a profitable direction. In either ...