Many companies are apprehensive to issue employee stock option (Esop) schemes due to taxation and accounting problems, according to Rajesh Dhume, director, Tax & Strategic Investment Consulting, Ernst & Young.
He was speaking at a symposium organised by the Indo-American Chamber of Commerce.
"There is a need for a psychological change. Company promoters have to take a long-term view about Esop schemes. We believe that companies will soon realise the importance of implementation of such a scheme," he said.
Dhume stated that not too many companies have opted for Esop schemes after the Securities and Exchange Board of India (Sebi) issued the guidelines.
The scope of employee stock option guidelines needs to be widened to unlisted companies, he said.
Dhume highlighted key areas of concern. These include the ambiguity in the computation of the fair market value in unlisted companies. "While computing the perquisite value it is not clear to which date the fair market value should be reckoned. Date of grant, exercise or allotment or transfer of shares," he said. He also said that the issue has been taken up with the government at various levels.
Dhume cited an example of a six year pre-and post-study of 382 publicly traded companies in US. It showed a 2.7 per cent annual increase in return on assets (ROA) over forecasted returns and 6.9 per cent higher ROA than comparable non-Esop companies.
