Question

    ESOPs are:

    A Mandatory obligations Correct Answer Incorrect Answer
    B Rights Correct Answer Incorrect Answer
    C A or b, depends on the terms and conditions Correct Answer Incorrect Answer
    D Bonus given to the existing shareholders Correct Answer Incorrect Answer
    E Bonus given to the potential shareholders Correct Answer Incorrect Answer

    Solution

    Employee stock ownership plans are just options that could be purchased at a specified price before the exercise date. An organization grants ESOPs as a right and not as an obligation , to its employees, directors and officers for buying a specified number of shares of the company at a defined price ( exercise price) after the exercise period (a certain number of years). Before an employee could exercise his option , he needs to go through the pre-defined vesting period which implies that the employee has to work for the organization until a part or the entire stock options could be exercised.

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