Stock Incentive Plans / ESOP / ESPS / SAR

Key Issues under COVID-19 Situation Key Solution under COVID-19 Situation

Remuneration v/s Retrenchment

Reduces
 Lock down of operations and staggered / partial re- immediate cash
commencement of operations to impact the results of outflows of the
By reducing the Organisation Markets to
operations and profitability
fixed pay, acts as reward the
 Every Company faces cash management issues in present time
a tool for employees by
of economic slowdown
improving increase of their
 To make difficult choice between maintaining efficient
profitability / wealth in long
workforce and profitability Stock
financial health run
 How to minimise the retrenchment
 How to compensate the employees by minimising cash Incentive
Reduction of
outflow (both monthly and incentive)
fixed pay to be
Plans Vesting period
 How to keep employees motivated in long run of 3-4 years to
compensated by ensure long term
appreciation of retention of
Corporates can
share prices in employees
minimise lay offs
future
/ retrenchments
and keep
workforce
engaged

Ideal solution for:

 Top Management / Department Heads
 Personnel with high variable pay
 Personnel managing critical functions / processes
 Stock Incentive Plans (“SIP”) Our Services

As a Systematic Investment Plan (“SIP”) adds value to your Pre SIP Services
investments in long term, the Stock Incentive Plans (“The SIPs for Discuss the requirements of the clients at lengths to provide them
Business”) adds value to your Business in long term. various alternatives and structures to arrive at the optimal solution for
the needs of the clients. We tend to create a transparent structure for
We provide complete solutions for your SIP / ESOP. We provide implementation of SIPs to address all possible concerns arising in
you 360O services to design, structure, document and implement future. We create SIP structures for the client, draft the scheme &
your SIPs, be stock option, share purchase, appreciation rights, related documentation and create templates to implement the Scheme
phantom stocks, RSUs, etc. Our spectrum of services includes: and monitor the same.

 Designing and structuring of SIP Post SIP Services

 Documentation for SIP and its implementation Assist the clients by providing them the fair valuation of the stock
options and also assisting them in P&L accounting, statutory
 Implementation of SIP
disclosures under Companies Act / SEBI Regulations, taxation,
 Drafting of trust deed
compliances, etc. We provide reliable valuation report for accounting
 ESOP Trust formation purposes also. We also undertake the services for review of existing
 Advising on accounting aspects ESOP schemes of the Company and suggest modifications for making
 Advising on Taxation aspects the plans better.
 Valuation
 Listing services Support Services
 Review of existing schemes Support services for liaison with the stock exchanges for in-principle
approval, documentation for in-principle approval, drafting of trust
And above all, with complete confidentiality and security. deed, registration of trust, trusteeship services, exit opportunities,
documentation and other support services for the SIPs.
 Kind of SIPs Benefit of SIPs

ESOP: Stock options are granted to an employee which  Retaining Key employees and reducing attrition
will vest in him over a defined period at a pre-agreed  Attract fresh talent in the Organisation
price or pricing formula.  Substitution for variable pay in long run
ESPS: Equity shares are allotted to an employee which are  Reduces cash outflow in initial years of growth
subject to certain lock-in period.  Sharing success with employees
SAR: A right is conferred to an employee to gain monetary  Tax efficient earnings for employees
benefits arising out of increase in the price of equity  No upper cap on returns
shares & such monetary benefit is settled in cash or kind.  Lets the market reward the performance of employees
RSU: Units granted to a participant, but shares are not  Improves corporate image
issued at the time of the grant. After the participant of a
RSU satisfies the vesting requirement, the company
distributes shares, or the cash equivalent of the number
of shares used to value the unit.
RSA: Grant of company’s shares in which the recipient’s
rights in the shares are restricted until the shares vest. On
completion of vesting requirements, employee has the
right to own and deal with his shares independently.
TSR: Is a performance based stock awards plan, where
vesting and / or exercise is linked with company’s stock
outperforming an index or a defined peerset.
 Decoding SIP

Grant Date: It is the date on which options are deemed to Vested Options: It refers to the options for which the
be granted to an employee Vesting Period has been successfully completed.

Grant Price: It is the price at which the options are Unvested Options: It refers to the options for which the
granted to an employee and by paying which he can own Vesting Period is still continuing.
equity in the Company. It is also referred to as Exercise
Price Intrinsic Value: It is the difference between the fair value
of equity shares on the date of grant of options and the
Vesting Period: It is the period for which an employee exercise price.
should be associated with the Company to become
eligible to apply for equity shares under SIP. The minimum Fair Value: It is the value of an option generally derived
required period is one year. through Black Scholes Option Pricing Model or in certain
cases through Binomial Model. This method derives value
Vesting Date: It is the date on which the Vesting period is of an option after considering various parameters like fair
over. value of equity shares, exercise price, volatility, dividend
yield, risk free rate of return and life of options.
Exercise: It refers to the act of applying for equity shares
in the Company after completion of the Vesting Period.

Exercise Period: It refers to the period within which, after

completion of the Vesting Period, the employee can
exercise his Vested Options.
 Options with SIP

One time vis-à-vis Regular Practice Trust vis-à-vis non-trust route

One time: Recognizes the existing employees and their Trust route: Adopted for convenience purposes and
past performance disclosure, which removes the administrative hassles at
Regular practice: Helps to attract and retain new talent, in the Board level
addition to rewarding the present employees Non trust route: Generally adopted for companies with
small size of population covered under SIPs
Stock Options vis-à-vis Direct Equity participation
Stock Options: Gives an option to exercise for equity in Intrinsic value vis-à-vis Fair value
future, which need not immediately dilute the voting Intrinsic value: Reflects the difference between the fair
capital value of stock price and the offered price
Equity Schemes: Immediately dilutes the existing Fair value: Reflects the value of the option taking into
shareholders and primarily rewards the past account other factors viz. time value, interest rate,
performances volatility, dividend yield, etc.

Primary Issuance vis-à-vis Secondary Schemes

Primary issuance: Results in dilution of all shareholders
Secondary schemes: Avoids dilution and existing share
capital pool can be allocated
 Key factors impacting SIP structure

What ??? Quantum ??? Vesting ???

 Option Plan Strike a balance between  Uniform / Bullet vesting

 Equity Plan  Entrepreneurship value created  Back / front ended cliff vesting
 Appreciation rights / stock award  Sharing wealth with employees  Performance based vesting
Plan

Whom ??? Price ??? Monetization ???

 All employees  At fair value  Listing

 Identified employees  At discount to fair value  Buyback
 Directors  Discount linked to performance  Change in control / PE exit

When ??? Restrictions ??? Other ???

 One time approach  Period of vesting  Complexity in accounting

 Regular practice  Period of exercise  Valuation
 Part of annual appraisal policy  Lock-in of shares  Review with changing times
 A long term Stock Incentive Plan should take into
Business consideration all stakeholders perspective
challenges
Business Challenges
 Take into account the business environment
 Growth prospects in the industry and for the company’s
market

Effective Employee Perspective

Shareholders SIP to  Build sense of ownership
Employee
value create perspective  Long term retention
enhancement perfect
balance
Cost and Performance
 Fixed and variable pay
 Charge to P&L account

Shareholders value enhancement

 Creates long term shareholder value taking into account risk,
Cost &
return, liquidity and growth
performance
 Dilution of existing shareholders
 Requirements of valuation

On date of grant of options

 Market price to be considered for intrinsic valuation
 However as per IndAS, accounting should be done on
fair valuation basis
 Hence fair value of options required through an option
pricing model (primarily black scholes option pricing
model is used)

On date of completion of vesting period

 No valuation required

On date of exercise of options

 Required under Section 17 of Income Tax Act, 1961
 Market Price shall be deemed to be fair value
 Taxation aspect

FOR THE COMPANY FOR THE EMPLOYEE

On date of grant of options On date of grant of options

 No tax liability  No tax liability

On date of completion of vesting period On date of completion of vesting period

 No tax liability  No tax liability

On date of exercise of options On date of exercise of options

 No tax liability on the Company  Perquisite tax under Section 17(2)(vi) of the Income
 Payment of tax by the Company as TDS on Perquisite Tax Act, 1961
tax liability under Section 17(2)(vi) of the Income Tax
Act, 1961 On sale of shares
 There are court decided cases, where this amount can  Long term / short term capital gains (depending on the
also be claimed as deductible expenditure by the holding period
Company in its tax returns
Clientele
Stock Incentive Plans: Stock Incentive Plans:
Unlisted Companies Listed Companies
 Clientele
Valuations

It will be our privilege to work for you and proud to have

your name on our profile ..…
About Sundae Capital
 About Sundae Capital

About us: What our name stands for:

 Registered with SEBI as Category I Merchant  As the name suggest, we tend to work amongst
Banker various limiting situations and diverse business
 Offers varied investment banking services challenges in the corporate structure with the
including raising of funds through Pubic / Rights right blend of advisory to arrive at the best
Offer, QIP, Private Equity, Capital Structuring, solution suited to all stakeholders with value
M&A Advisory, Capital Market Advisory, enhancement strategies, policies and
Buyback, Open Offers, Delisting, Valuations, transactions.
Stock Incentive Plans and Start-up Advisory  We take you through the entire process and take
 Promoted by professionals with vast transaction an additional mile even if required after
experience varying amongst different industries completion of the project
 Experienced tram of professionals with  We are extremely passionate about what we do
experience in investment banking, transaction and with the domain knowledge, we provide
services, advisory and execution solutions to all your needs by spending quality
 Proven track record within a short period of time with the team, understanding the business
operations challenges and the specific corporate goal while
maintaining our independence
 Sundae Capital: Service Portfolio

Capital Market:
 Advisory on the structuring and raising of funds
Structuring &
through public offer, rights issue, etc. Planning
 Due Diligence
 Fund raising through public issue, rights issue, Successful Transaction
private placement, QIP closure of Due
 Buyback, consolidation of holding, open offer, transactions Diligence
mergers and acquisitions, etc.
 Advising on direct listing, delisting, exit offer for
dissemination board companies, etc.
 Independent and objective advice on the Pre
Investor
IPO structuring, strategic alternatives, assisting presentation
Advisory &
in documentation, record room creation, etc. Document-
and fund
ation
 Interaction with regulatory authorities raising
 Pre and post transaction advisory services
Regulatory
approvals
Promoters & Directors
NitiN Somani, Director Sourabh Garg, Director
FCS, CFA, IBBI Registered Valuer (SFA) FCA, IBBI Registered Valuer (SFA)
NitiN, Promoter Director of Sundae Capital Sourabh, Director at Sundae Capital Advisors
Advisors Private Limited, is having rich experience Private Limited, is having a varied experience of
of more than 1½ decade in capital markets, over 1½ decade in the field of Valuation of
investment banking, corporate & financial securities and financial assets, instruments and
structuring, valuations, structuring of stock intangibles, Corporate & Transaction Advisory and
incentive plans, distribution of financial products, Corporate Finance. He also has an experience in
start-ups, finance and secretarial compliances. His creating and spearheading a young and robust
experience varies across a wide range of industries team handing multiple domestic and international
and has successfully undertaken various complex valuations, including derivatives, across
assignments. He is responsible for mentoring the various industries. At Sundae, his role spans across
Team at Sundae & delivering solution based business development and management of
advisory to the clients, structuring of the valuation practice and transaction advisory
transactions and to ensure smooth transition of services.
the project.
Sourabh is a Fellow member of ICAI in practice,
NitiN is a Fellow member of ICSI, CFA and Registered Valuer for Securities & Financial Assets,
Registered Valuer for Securities & Financial Assets. Post Graduate Diploma holder in US accounting
You can connect with him at standards and GAAP & SOX from ICFAI. You can
[email protected]. connect with him at
[email protected].
Promoters & Directors
Radhika Somani, ACA Arvind Mohta
Radhika, Founder at Sundae Capital Advisors Arvind has an overall experience of 12 years and
Private Limited, is having a varied experience of has worked for 7 years in the industry with ICICI
over 7 years into practice into loan syndication, Bank Limited, Price Waterhouse Coopers and SBI
corporate advisory, capital market advisory, Capital Markets Limited. He has an experience in
valuation, taxation and audit. Radhika is the field of structured finance, project finance,
responsible for advising on the structuring, corporate advisory, etc. He is partner of M/s Biyani
taxation, accounting advisory and drafting of Mittal & Company, Chartered Accountants. He is a
documents and office administration. Fellow Chartered Accountant, CFA (USA). He has
also cleared Forex and Treasury certification and
Radhika is a Chartered Accountant and holds a Forensic audit and Fraud Prevention courses
Diploma in Financial Management. You can conducted by ICAI.
connect with her at [email protected].
Satin Somani
Govind Biyani Satin has an experience of over 9 years in finance,
Govind has an extensive experience of over 14 accounts, MIS, taxation, audit and loan syndication.
years in practice in various areas such as debt Presently he is working with Mahindra Rural
syndication, advisory services in securitisation, Housing Finance Limited. Previously he was
audit, taxation, valuation, etc. He is partner of M/s associated with Wallstreet Finance Limited and
Biyani Mittal & Company, Chartered Accountants. Mega Power Transmission Limited. He is a
He is a Fellow Chartered Accountant and holds Chartered Accountant by profession and holds
Diploma of Information Systems Auditor (DISA- Bachelor degree in Commerce.
ICAI). He has also cleared IFRS certification and
Forensic audit and Fraud Prevention course
conducted by ICAI.
Advisory Board
Bhumika Batra, Law Graduate and FCS Anil Khandelwal, FCA, Associate member of
Certified Internal Auditors from Institute of Internal
Bhumika is a Partner of Crawford Bayley & Co., one Auditors Inc.
of the oldest law firms of India. She possesses over
15 years of experience in regulatory and legal Anil is the Managing Director of Yogicsecret
practice, specializing in corporate law. She is a law Healthcare Private Limited, Managing Partner -
graduate and a fellow member of the Institute of Lantoms Advisors LLP and country partner - Volitan
Company Secretaries of India. She is a recipient of Global, Turkey. He is a results oriented finance
scholarship from London School of Economics. She professional with over 35+ years of experience
has also been awarded as Lawyer of the Year by working with large corporate and across sectors in
Legal Era in 40 under 40 category in 2018. India and oversees namely, GSK, Arcelor Mittal,
Ranbaxy, Havells and LT Foods.
She has co-authored the book “Treatise on Company
Law” in 2014. She is a regular feature writer in India The key areas of his experience and expertise
Business Law Journal. She has also contributed in includes strategic and business advisory, investment
various other writings like Company Law Ready banking, analytical thinking, business turn around,
Reckoner, Transfer and Transmission of Shares - A capital syndication, Mergers & Acquisition, risk
treatise, Asia Business Law Journal etc. She sits as an identification & mitigation, developing performance
Independent Director on the boards of various listed matrix & monitoring, business processes innovation
and unlisted companies. and creativity.
Team
Ashi Sood Rajiv Sharma
Ashi has an experience of over 10 years in capital markets, Rajiv Sharma has an overall experience of more than a
investment banking, corporate restructuring, valuations and decade in sourcing and execution of Capital Markets
structuring of stock incentive plans. She has worked transactions viz. IPOs, Rights Issue, Buyback, Delisting, M&A,
extensively for clients for their transactions including M&A, Demerger, Corporate Restructuring, etc. He also has an
IPO, rights issue, buyback, open offer, delisting, etc across overall experience of more than five years in the domain of
various industries. She is well versed with various SEBI valuation of securities and financial assets. He has worked
regulations and with her experience leading the team in very closely with various corporates with operations in
successfully completing the assignments. diverse industries which has provided him in-depth exposure
to the entire gamut of capital markets and merchant banking
Ashi is a CFA and holds a bachelor degree in Commerce. You services.
can connect with her at [email protected].
Rajiv is a Company Secretary, CFA, Masters in Finance from
ICFAI. He also holds a Bachelor (Honours) degree in
Commerce from the University of Calcutta. You can connect
Anchal Lohia with him at [email protected].
Anchal has over 5 years of experience in Merchant Banking
and transaction advisory Services. She is actively involved in
capital market transactions and restructuring assignments.
She has managed various assignments like Rights Issue, Open
Offers, Buyback and Delisting. Her experience includes
working on various corporate and commercial laws.

Anchal is a Company Secretary. You can connect with her at

[email protected].
Team
Harshit Goyal Dinesh Kumar Singh
Harshit has an overall experience of more than 4 years in the Dinesh has an experience in structuring complicated financial
field of Valuation of securities and financial assets, early models and conducting valuations of various financial
stage companies and other intangibles like brands, patents, instruments and intangible assets for various transaction
etc. Also, he has worked in the field of Auditing and taxation (such as M&A, Corporate restructuring, Investments, etc) and
in his initial stage of career. He has independently handled regulatory purposes (CBDT, RBI, FEMA, etc). He has more
multiple domestic and international complex valuations and than one and a half year of experience in handling regulatory
advised companies on valuations for the purposes of compliances and reporting requirements pertaining to the
financial reporting, transaction, restructuring, taxation, liquidity domain of the banking structure.
dispute resolution and financing.
Dinesh is a Chartered Accountant and holds a bachelor
He has successfully completed the “Certificate in Business degree in Commerce from the St. Xavier’s College. You can
Valuations” training and examination conducted by ACCA- UK connect with him at [email protected].
and the Institute of Chartered Accountants of France (CSOEC)
and holds “Certificate in Corporate Valuation (CCV)” from The
Association of International Wealth Management of India Rashmi Kumari
(AIWMI). He has done Post Graduate Diploma in Rashmi has experience in Valuation and Financial Modelling.
Management with specialisation in Risk Management and a She is actively involved in execution of valuation
Bachelor (Hons) degree in Commerce from University of assignments. She has got a knack in financial modelling and
Delhi. You can connect with him at working rigorously on it. She has successfully undertaken
[email protected]. valuation assignments for Private Placements (specifically
Start-ups). Also, she is equipped with wide industry
knowledge and has performed various sectoral and industry
analysis.

Rashmi is an MBF (Finance Major) from Indian Institute of

Finance. You can connect with her
at [email protected].
7 Contact us

Sundae Capital Advisors Private Limited NitiN Somani at

3rd Floor, C - 11, Community Centre Cell: +91 98 1069 4501
Janak Puri, New Delhi - 110 058 E-mail: [email protected]
Tel.: +91 11 4914 9740
Sourabh Garg at
E-mail: [email protected] Cell: +91 98 7134 0038
Website: www.sundaecapital.com E-mail: [email protected]

Anchal Lohia at
Locations present Cell: +91 99 9918 1829
● Mumbai ● Bengaluru ● Indore E-mail: [email protected]

Let Passion work for you!!!