Some listed companies have announced plans to issue ESOP shares to employees at a cheaper price than on the stock exchange. For example, Mobile World Investment Corporation (stock code MWG) will issue ESOP in the first quarter of 2025 with more than 19.9 million shares, equivalent to a ratio of 1.3642%. The issued shares will be restricted from transfer within 2 years from the end of the issuance, after each year, 50% of the purchased shares will be freely transferable. The selling price for employees is VND 10,000/share.
Many Mobile World employees are continuously buying cheap stocks under the ESOP program.
PHOTO: MWG see
The program of selling cheap shares to employees has been implemented by Mobile World for more than ten years. With the offering price of 10,000 VND, the company's employees can buy shares at a price 50,000 VND cheaper than the price of MWG shares currently traded on the stock exchange. In total, employees only spent nearly 200 billion VND to own shares worth more than 1,200 billion VND. Of which, according to the list of more than 300 employees who were able to buy shares this time, Mr. Doan Van Hieu Em, member of the Board of Directors - General Director of Mobile World Joint Stock Company (a subsidiary of MWG) operating two retail chains Mobile World and Dien May Xanh - is the person who bought the most with more than 1.6 million MWG shares. Thus, Mr. Doan Van Hieu Em only needs to spend 16 billion VND to buy shares worth more than 96 billion VND.
In many shareholder meetings, investors have questioned MWG's leadership about this continuous ESOP share issuance plan. Most recently, in the February investor meeting, this topic was also of interest. The company's Chairman of the Board of Directors - Mr. Nguyen Duc Tai said that the ESOP policy in 2025 could be changed in a way that would rebalance the interests between shareholders and the company's leaders.
In addition to Mobile World, VNG Corporation (stock code VNZ) recently announced a board resolution on the plan to issue shares under the ESOP program in 2024. Accordingly, the company will issue nearly 641,000 shares to employees at a price of VND30,000, 92% lower than the floor price of VND360,000/share. The program will be implemented in 2025, with a regulation restricting transactions within one year. Or Duc Thanh Wood Processing Corporation (stock code GDT) will issue nearly 1.1 million ESOP shares, equivalent to 4.55% of outstanding shares. The selling price for employees is VND10,000/share, nearly 60% lower than the trading price on the floor. These shares will be subject to transfer restrictions for the first two years after issuance and from the third year onwards, 50% will be allowed to be sold...
The issuance of ESOP is used by many businesses as a policy to attract and retain employees. The company's leaders and employees who buy ESOP shares at a very cheap price are also part of their income during the year but do not have to pay personal income tax. Only when this individual sells ESOP shares will personal income tax be deducted like normal stock investors (this personal income tax will be very low compared to the income tax payable when receiving annual salary and bonus).
On the contrary, for shareholders, the company issuing more ESOP shares will reduce the benefits due to the increase in the number of shares. From there, the earnings per share (EPS) will decrease (EPS = profit after tax - preferred dividends / Total number of outstanding shares). The more shares there are, the lower the EPS will be if the profit generated by the company does not increase correspondingly with the increase in the number of shares.
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