The government is set to review the taxation of employee stock ownership plans (ESOPs) to address issues that curb their effectiveness as a compensation tool. A key issue is whether stock options should be taxed only when an employee sells them and not again at the time of vesting. There are also issues with the valuation of the benefit in the case of unlisted companies. Stock options and other such instruments are a popular compensation tool for the industry, particularly startups. Companies also use them to retain talent.