Points | Employees Stock Option Scheme | Employee Stock Purchase Scheme |
Meaning | “Employee stock option scheme or ESOS” means a scheme under which a company grants employee stock options directly or through a trust. | “Employee stock purchase scheme or ESPS” means a scheme under which a company offers shares to employees, as part of a public issue or otherwise, or through a trust where the trust may undertake secondary acquisition for the purposes of the scheme. |
Purchase of Shares | Under ESOS, employees are given an option to purchase shares at a later date, i.e. after the vesting period. | Under ESOPs, employees are given an option to purchase shares on the spot at a discounted price. |
Lock-in | The company may specify the lock-in period for the shares issued pursuant to the exercise of the option. | Shares issued under an ESPS shall be locked in for a minimum period of one year from the date of allotment. |
Public Issue | ESOS has to be approved separately by the company in general meetings by passing a special resolution. It cannot be part of a public issue. | Shares under ESPS can be issued as a part of a public issue. |
Vesting Period | The minimum vesting period for ESOS is one year. | No vesting periods for ESPS as shares are offered on the spot. |