Let's take an example for a better understanding of ESOP.
ESOP (Employee Stock Option Plan) is a good scheme made in the interest of employees. Under the ESOP plan, the employee can be entitled to the shares of the company. ESOPs give special benefits to employees as compared to other schemes. According to the information, under the ESOP, the government will give shares out of its remaining 24 stakes. 'O' in ESOP abroad means ownership. Companies in India do this to motivate employees to perform better without increasing costs.
The tax benefits of an ESOP exit strategy can be significant. These benefits accrue to the selling shareholders (corporations) and employees participating in ESOP. The tax benefit to the selling shareholders and the corporation depends on whether the corporation is taxed as an S-corporation or as a C-corporation.
The non-tax benefits of an ESOP exit strategy are numerous and should also be considered by the business owner based on the owner's goals. Some of these advantages are: