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ESOPs Vs Bonus
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ESOPs Vs Bonus: ESOPs (Employee Stock Option Plans) and bonuses are two different forms of compensation, and which one is better depends on various factors.
ESOPs offer employees the opportunity to own a stake in the company they work for by granting them the right to purchase shares at a discounted price in the future. The value of the shares can increase over time, providing a potential long-term financial benefit to the employees. However, the value of the shares can also decrease, and employees may face restrictions on when they can sell their shares.
On the other hand, bonuses provide immediate cash compensation to employees and can be a good way to reward performance and incentivize employees to meet or exceed goals. However, bonuses can be subject to taxes and may not have the same long-term financial benefits as ESOPs.
Ultimately, the decision of whether to offer ESOPs vs bonuses depends on the specific circumstances of the company and the goals of the compensation plan. A well-designed compensation plan may include a combination of both ESOPs and bonuses to provide a balanced approach to rewarding and retaining employees.
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