Employee stock options
Also called: ESOP, ESOPs, employee stock option plan, share-based payment
Options given to employees to buy company shares at a set price in future, a form of pay that adds to the share count when exercised.
Stock options cost no cash when granted, but they are a real cost of employing people and dilute existing shareholders. Under Ind AS, companies charge an estimate of their fair value as a share-based payment expense. Be careful with "adjusted" profit figures that add this expense back.
Learn more in these lessons
- Share dilution and employee stock optionsHow do new shares and stock options affect existing shareholders?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.