As per the ESOP scheme, the norms as per which employees can access their rights are known as the ESOP scheme. An employee can exercise the rights post a specific duration, which is often more than one year. The right to exercise the option might get conferred with the employee in future days. The concerned date on which the concerned start-up employees do get authorization of having rights of acquiring share is generally called the ‘vesting date’ as per official term. The rights might be vested completely or partly over the assigned vesting period. For example, if an employee is offered x number of options on a certain date that can be exercised in terms, like around 20 percent post ending of first year, thirty percent post completing the second year and the rest upon completion of the third year from the date of acknowledgment.
The plan may specify similar or varying grant prices or have access to price for the vesting of such. In general, the grant price or the concerned price on which an employee can manage to purchase the company's share often remains constant. It is often considerably lower than the existing market price of the share if the share remains enlisted.
As the employee is simply given a choice without involving any compulsion, they (employees) can feel flexible to exercise the choices. It’s up to them whether they would wish to work upon the same or let it get lapsed if the concerned share price is lesser in comparison with the price that is exercised. Here the employees are assigned with a period within which they must exercise the available choices. Upon failing to exercise the same, the rights may get wasted. Concerned date when the employees do exercise the available choices for purchasing the shares is called the ‘exercise date.’ There remains no cash outflow or implications concerned with taxation when the choices are given the grant and when the choices are conferred upon the employee.