Employee stock options (Esops), intended to be incentives to retain and reward an organisations employees, seem to have achieved just the opposite for a lot of IT companies. On the sidelines of a recent seminar, a senior employee in a leading IT company told of a colleague who, after 14 years of working with them, was planning to leave and try his luck elsewhere. Why Because the Esops he had received in the past 14 years would provide a cushion even if he failed in his new job.
There is no tax liability on the employee when Esops are given; the only liability is when these are sold. In European countries and in the US, Esops are taxed twice or even thrice. No wonder there are are so many IT professionals who have purchased entire coffee plantations in South India, some of them for upto Rs 100-150 crore, only using Esop capital!
Fruits of diversifying
The concept of marketing is as relevant in the financial markets as it is in the FMCG sector. The IPO of the company has to be marketed properly if the issue has to get sizeable (over)subscription.
In Mumbai, around Dalal Street, the area where the Bombay Stock Exchange is situated, the stall owners selling food products and fruit juices also play a significant role in the marketing of the IPOs. Most such vendors have become sub-brokers of known primary market intermediaries. These vendors market the issue and also get commissions as brokerage when the applicant is allotted shares on application forms which bear their code. Now thats what we call the fruits of a market economy!