What is Employee Stock Option Plan (ESOP)?
In a typical venture capital investment, the investor and the company will agree to the creation of an option pool before the investor invests in the company. The option pool is also sometimes called an option plan, Employee Stock Option Plan, or ESOP – usually defined as the “Plan” in a venture capital term sheet. What ESOP means is that the company will set aside a certain number of shares in the company to be issued to employees at a future date.
