law: SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
  2. Definitions
  2.1 In these
  
  Guidelines, unless otherwise defined,-
  (1)
  
  "employee" means-
  (a) a 
  
  permanent employee of the company working in India or out of India ; or
  (b) a director of the
  
  company; whether a whole time director or not; or
  (c) an employee as
  
  defined in sub-clause (a) or (b) of a subsidiary, in India or out of India , or of a holding
  
  company of the company;
  (2) "employee
  
  compensation" means the total cost incurred by the company towards
  
  employee compensation including basic salary, dearness allowance, other allowances,
  
  bonus and commissions including the value of all perquisites provided, but does
  
  not include:
  (a) the fair value of the option granted under
  
  an Employee Stock Option Scheme; and
  (b) the discount at which shares are issued
  
  under an Employee Stock Purchase Scheme;
  (3) "employee
  
  stock option scheme (ESOS)" means a scheme under which a company grants
  
  option to employees;
  (4) "employee
  
  stock purchase scheme (ESPS)" means a scheme under which the company
  
  offers shares to employees as part of a public issue or otherwise;
  (5)
  
  "exercise" means making of an application by the employee to the
  
  company for issue of shares against option vested in him in pursuance of the
  
  ESOS;
  (6) "exercise
  
  period" means the time period after vesting within which the employee
  
  should exercise his right to apply for shares against the option vested in him
  
  in pursuance of the ESOS;
  (7) "exercise
  
  price" means the price payable by the employee for exercising the option
  
  granted to him in pursuance of ESOS;
  (8) "grant" means
  
  issue of option to employees under ESOS;
  (9) "independent
  
  director" means a director of the company, not being a whole time director
  
  and who is neither a promoter nor belongs to the promoter group;
  (10) "market
  
  price" of a share on a given date means the closing price of the shares on
  
  that date on the stock exchange on which the shares of the company are listed.
  Explanation : If the shares are
  
  listed on more than one stock exchange, but quoted only on one stock exchange on
  
  the given date, then the price on that stock exchange should be considered. If
  
  the share price is quoted on more than one stock exchange, then the stock
  
  exchange where there is highest trading volume on that date should be
  
  considered. If share price is not quoted on the given date, then the share
  
  price on the next trading day should be considered;
  (11)
  
  "option" means a right but not an obligation granted to an employee
  
  in pursuance of ESOS to apply for shares of the company at a pre-determined
  
  price.
  (12)
  
  "promoter" means-
  (a) the person or
  
  persons who are in over-all control of the company;
  (b) the person or persons who are instrumental
  
  in the formation of the company or programme pursuant
  
  to which the shares were offered to the public;
  (c) the person or
  
  persons named in the offer documents as promoter(s):
  PROVIDED that a director or
  
  officer of the company, if they are acting as such only in their professional
  
  capacity will not be deemed to be a promoter.
  Explanation:  Where a promoter of a
  
  company is a body corporate, the promoters of that body corporate shall also be
  
  deemed to be promoters of the company;
  (13) "promoter
  
  group" means-
  (a) an immediate relative of the promoter
  
  (i.e. spouse of that person, or any parent, brother, sister or child of the
  
  person or of the spouse);
  (b) persons whose shareholding is aggregated
  
  for the purpose of disclosing in the offer document "shareholding of the
  
  promoter group".
  (14) "share"
  
  means equity shares and securities convertible into equity shares and shall
  
  include American Depository Receipts ( ADRs ), Global
  
  Depository Receipts ( GDRs ) or other depository
  
  receipts representing underlying equity shares or securities convertible into
  
  equity shares.
  (15)
  
  "vesting" means the process by which the employee is given the right
  
  to apply for shares of the company against the option granted to him in
  
  pursuance of ESOS.
  (16) "vesting
  
  period" means the period during which the vesting of the option granted to
  
  the employee in pursuance of ESOS takes place.
  2.2 All other
  
  expressions unless defined herein shall have the same meaning as have been
  
  assigned to them under the Securities and Exchange Board of India Act, 1992 or
  
  the Securities Contracts (Regulation) Act, 1956 or the Companies Act, 1956, SEBI
  
  (Disclosure and Investor Protection) Guidelines, or any statutory modification
  
  or re-enactment thereof, as the case may be.
  3.1 These Guidelines
  
  shall apply to any company whose shares are listed on any recognized stock
  
  exchange in India.