To retain talent and increase productivity, companies offer their employees stock option plans (ESOPs).
ESOPs are stock options granted to employees of a company in the form of stock-based compensation that give an investor the right, but not the obligation, to buy or sell a stock at a price and on an agreed date. The price and quantity of shares are usually predetermined by the company.
Unlike standard exchange-traded options, ESOPs are generally not traded on an exchange. For some companies, employees will have to wait a certain time before being able to exercise the option.
One such company that distributes ESOPs to its employees is Funding Societies, a Southeast Asian digital finance platform for SMEs operating in Malaysia, Singapore, Indonesia, Thailand, Vietnam and India. .
Its spokesperson, Chai Kien Poon, said the implementation of ESOPs has helped the company gain strength against its competitors, and added, “As the ESOP gives employees a sense of belonging company, it improves their job satisfaction and morale, and subsequently helps us with employee retention.”
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He reported that since implementing ESOP, the company has experienced its lowest employee attrition rate and highest employee satisfaction scores. ESOPs can also serve as an incentive to encourage employees to contribute beyond their immediate roles and responsibilities, he said, according to Vulcan Post.