Prudently Draft ESOP with the help of a Leading Consulting Firm

1. Prudently Draft ESOP with the help of a Leading Consulting Firm Start-ups and newly established companies often fail to manage and administer their capital amount and get trapped in liquidity problems. Liquidity problems mainly arise due to limited or inconsistent cash inflows, no equity participation, because of lucrative salary structures, etc. Thus, these companies may lose their workforce if they are not able to provide attractive terms to employees. To supercharge organizational performance and create wealth for both employees and founders, organizations can make use of a powerful tool called ESOP or Employee Stock Option Plan. It is an effective compensation tool that helps employers conserve cash and at the same time allows employees to have a share in the company’s profit. Organizations new in this field can avail of ESOP consulting services to prudently draft an ESOP plan. Employee Stock Option Plan is a strategy for retaining and motivating employees, as under this company gives employees the right to buy a certain number of the company's shares at a fixed price for a certain period. However, to avail of this option, employees need to complete the vesting period. ESOPs are used by new-gen companies to retain skilled employees and also to save cash compensation, as by offering stock options they save funds that they use to channel growth. This not only provides financial gains to the employees but also creates a sense of belonging and ownership amongst the employees. In this compensation strategy organizations have the freedom to link employees’ rewards with their individual performance as well as the performance of the company.

2. Businesses who are not sure whether ESOP is the right solution for them or not can avail services of an ESOP consulting firm that will help them weigh the advantage and disadvantages of an ESOP solution. ESOP consulting firms not only determine whether this option will be beneficial for them or not but they also formulate favourable schemes for both employers and employees and ensure its smooth implementation, provide valuation, and advise companies on the listing of shares after conversion of ESOPs. Besides this, experienced ESOP consultants also help companies determine whether stock options, deferred compensation, synthetic equity, restricted stock, and other equity-sharing plans are right for them or not. ESOP consulting firms also provide analysis for succession and exit planning to the owner of the closely held business if they wish to sell all or part of their interest in the business. Organizations can seek the help of an experienced ESOP consulting firm to ensure the success of their Employee Stock Option Plan. ESOP consultants help organizations in the following manner: Maintains Ownership Culture–ESOP consultant creates and maintains an ownership culture in which both management and employees are motivated to perform and improve the performance of the company.

3. Compensation and Incentive Planning– An ESOP consultant after carefully listening to the organizations’ strategic needs, goals, and objectives help them create a plan to retain valued employees. Corporate Governance– ESOP consultants also guide organizations in defining the roles of their board of directors, officers, as well as shareholders. Distribution Policies– ESOP consulting firm ensures that the organizations' goals and objectives are met through the customization of distribution policies. Organizations can get in touch with the ESOP consulting firm for all their ESOP-related needs, as they build long-term incentive plans exactly customized as per the needs of the organization and its employees. The consulting firm has all the knowledge and resources to help organizations at all stages, from advisory and preparation to the implementation of ESOP which further results in enhancing the overall productivity of the organization. It also improves liquidity and flexibility in business and creates a market for selling shares.