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Mar24
Fewer Option Grants
The following is not meant to be legal advice.

 

The cost of granting stock options has led to the issue of restricted stock in the United States.  This new proposed law in India, extending a 35% fringe benefit tax, may lead to stock options being selectively granted to employees and like in the United States, become a less attractive way to incentivize employees.

 

Employees in India as a result of the new proposed law, will negotiate for higher forms of other compensation, such as cash. Cash-tight technology enterprises may be discouraged from India activity. Current employers in India that granted stock options to employees in India face uncapped tax liability for which they had not planned.  These employers may reduce their investment in India in favor of other locations such as China and other developing nations where the labor is not expensive.


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