Specialised ESOP Valuation Services for Public & Private Companies

Valuation of ESOP and sweat equity

An Employee Stock Option Plan (ESOP)allows a company to awards/compensate its employees in form of stock options, basis their performance.

With increased number of ESOP schemes, the requirement of ESOP Valuations for regulatory, compliance and tax purposes have also increased many manifolds.

Along with ESOPs, offering sweat equity shares is also a widely-used method of compensating and incentivizing employees at the management-level. Sweat equity is a share that a company issues to its directors or employees at a discount or for consideration other than cash, for providing their niche skills, know-how or intellectual property.

At RNC, we have been leaders in asset valuation services for more than three decades. Our ESOP valuation is a part of our specialized valuation services for private and public organizations. Our ESOP valuation helps clients with an expert and objective opinion on risks and opportunities in their ESOP models as well as provides them with the valuation required for accounting and tax purposes.

ESOP valuation is required for accounting purposes for booking compensation loss in the Profit and Loss account by the company issuing ESOPs. The ESOP valuation is performed at the date of grant of options and compensation loss is apportioned over the vesting period.

Further, the tax impact on the perquisites value of ESOPs needs to be determined at the time of exercise of options. Also, the compensation expenses result in the fall of the EPS of the company and the probability of higher tax payout by employees may turn the ESOP scheme unattractive. Thus, proper planning of ESOP is inevitable and valuation plays a critical role here.

To know more about our services, book an appointment with us.

RNC has deep experience with the full range of ESOP valuation techniques, including:

Equity Valuation (Intrinsic Value)

Fair Valuation (Option Pricing Models)

Closed form solutions such as the Black-Scholes formula

Binomial lattice models, customised to capture key features such as early exercise behaviour

Monte Carlo simulations, incorporating performance and/or market conditions and other complexities in the analysis.

Valuation for Repricing and other award modifications

Credentials

Infrastructure Leasing & Financial Services

Valuation of over 85 Indian and International group companies and their subsidiaries.

Reliance ADA Group

Valuation of Reliance Communications Ltd., Reliance Communications and Infrastructure Ltd., Reliance Telecommunications Ltd., Reliance Infratel Ltd. Reliance Naval and Engineering Ltd. under IBC, having an approximate total debt of INR 53,700 Crores.