Hi Rodinhooders,
This is a practical post a bit different from the philosophical ones, perhaps because we are at the ground floor (one of Alok’s previous posts)! Let me introduce myself. I am the founder of Value Edge, a 2 year old start up that does business analytics outsourcing for global bio-pharma companies. We have been reasonably successful, are self funded and profitable. We have got great talent on board and I want to develop an ESOP plan that is “best in class” and genuinely creates wealth.
It would be good to learn from others who have gone this way. My few questions are:
(1) if we do an ESOP then what are the tax implications for the company and for employees? If employees now have to pay a tax on something which may later be worth toliet paper then it becomes less attractive to them and they be not exercise their option.
(2) Also how does one decide what is the offer price? It may be par for now but it should keep increasing
(3) What are some of the do’s and don’ts. For example, I have been advised to have an ESOP trust that administers the ESOP.
Thanks a lot in advance. If anyone wants to connect directly with me please send me a mail at rohit.anand@valuedgeindia.com. All advice will be greatfully appreciated.
Rohit Anand