RSU v/s ESOPS

Hi Folks, Can you help me with the difference between RSU and ESOPS ? I'll share my understanding, requesting the community to help as well. Assumption for comparison: ₹/$ 100,000 worth of RSU vs ESOPS vested of 4 years equal distribution from 1st Jan 2024. RSU: Since these are given for listed orgs, ₹/$ 25,000 worth of stocks are vested every year starting 1st Jan 2025 , 1st Jan 2026,1st Jan 2027 ,1st Jan 2028. ESOPS: What happens on 1st Jan 2025 ? Does the employee need to buy stock options worth ₹/$ 25,000 from his own pocket. ( I know they are given based on current valuation divided by number of shares plus some discount and FMV Stuff) Main point here is , incase of ESOPS whatever is stated at a part of compensation, employee need to shell out of his pocket? Is there anything I'm missing?

Aaron Carmden

PhonePe

2 months ago

ESOPs are like discounted available to purchase stocks. After they are vested, it means that company is okay to sell you those shares at a discounted price. This discounted price is called as strike price. You pay this amount to company and company gives you the shares in return. So until you exercise the vested options, they're not really yours.