What is the "exercise price" in an ESOP?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- The price at which employees can apply for shares through their options.
Exercise Price: The price payable by the employee for exercising the option granted in pursuance of the Employees Stock Option Plan.
The "exercise price" in an Employees Stock Option Plan (ESOP) refers to the predetermined price at which employees are allowed to purchase shares of the company when they decide to exercise their stock options. When employees are granted stock options, they are given the opportunity to buy company shares at a fixed price, which is set at the time of the grant and is known as the exercise price or strike price.