Several features make ESOPs unique as compared to other employee benefit plans.
Most companies, both domestic and worldwide, are utilising this scheme as a essential tool to reward and retain their employees. Currently, this form of re-structuring is most prevalent in IT companies where manpower is the main asset. In India, ESOP is used largely to motivate the employees to put in their best and in turn help the company enjoy lower employee turnover and retain its talent pool. These two uses probably account for over two-thirds of all the ESOPs now in existence and are expected to increase with time. This has yet to catch on in India perhaps because the scale of ESOP so far is too small for many of these uses.