It’s raining ESOPs in the Indian economy recently, thanks to the Zomato IPO clearing the path for other Indian firms to explore listing. Ten firms, including Paytm, Oyo, Zomato, Nykaa, and Pharmeasy, have raised over $5.2 billion for their employees through ESOPs this year or are planning to do so. Flipkart, a Walmart-owned ecommerce website, has created an INR 17,000 crore ESOP pool, propelling it to the top of the list of Indian technology companies that have granted stock options to employees. In the run-up to its IPO, Ola, the ride-hailing company, announced an increase in its ESOP pool to ..read more

If you’re a founder and trying to set up an ESOP plan for the first time, you sure are going to wobble in the maze of ‘where do I start with this process?’ Besides mastering the umpteen ESOP jargon, one must also determine which variables to include in an ESOP plan to attract and retain top talent.  Thus, it is not surprising founders grapple with a range of unclear questions. Not to worry, this blog aims at four essential points to consider before setting up an ESOP pool. Let’s get started. Four Points to Consider Before Setting Up an ESOP Pool Employee stock ownership plans (or ESOPs) a ..read more

Successful Employee Stock Option Plans (ESOPs) often enable higher job satisfaction, employee retention, and increased productivity among employees and stakeholders at an org. Hence, having a clear blueprint of the process is critical for a masterful implementation. This article discusses the formation of ESOPs in India and pointers for a successful ESOP strategy.  Process of ESOP Formation Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 (“Rules”) and Section 62 (1) (b) of the Companies Act, 2013 are associated with the issuance of ESOPs. ESOP formation involves: Finding ..read more

Employee Stock Option Plans (ESOPs) are a novel way of compensating employees. They are highly suitable for a startup that prefers to conserve cash but rewards its employees well. That being said, there is a lot that goes into the structure and operations of an ESOP. Therefore, a founder must be aware of basic ESOP terminology to plan and execute ESOPs smoothly. We have simplified this task for you by creating this cheat sheet of ESOP terms, which you can peruse at any point. ESOP Terminology that Founders Must Know In India, ESOPs are regulated by the Companies Act, 2013 and Securities and Ex ..read more

We have called this a dictionary but not organized it alphabetically intentionally! We’ve tried to capture the flow of events that take place and we believe this will help you understand Stock Appreciation Rights (SAR) better! SAR: The word SAR stands for Stock Appreciation Rights. A SAR is a form of bonus compensation given to employees that is equal to the ‘appreciation’ or increase in the price of the company stock over an established time period. SARs are beneficial to the employee when the company stock price rises. In SARs, employees do not have to pay the exercise price but receive the ..read more

SARs are a form of bonus compensation given to employees equal to the ‘appreciation’ or increase in the price of the company stock over an established time period. This form of compensation is beneficial to the employee when the company stock price rises. Through SARs, employees can actually exercise and realize liquidity from a particular stock at any point between the time it vests and until the time it expires. How are SARs rewarded? In most cases, the vesting schedule of SARs is tied to performance goals. After an employee meets pre-defined performance targets, an exercise period is alloca ..read more

Stock Appreciation Rights or SARs are picking up momentum in India. You would have recently read about the serial entrepreneur Jiten Gupta’s startup Jupiter Money adopting Stock Appreciation Rights for their entire team (this is being managed end to end by trica equity). So, let us spend some time understanding the difference between Stock Appreciation Rights and ESOPs. Let’s first explain to you what ESOPs are. ESOPs stands for Employee Stock Options, and under an ESOP Plan, employees are given an “option or right” to purchase the company’s shares. With ESOPs, an employee has to actually “pay ..read more

Over the last few years, there has been incremental growth in the start-up ecosystem. With this, it is incumbent upon these companies to hire and retain the best talent. As a result, employee stock option plans or ESOPs, which were conventionally reserved for incentivizing senior management, are extended to most loyal employees, irrespective of their designation. We recently hosted a webinar session to catch up with Srikanth Iyer, the co-founder, and CEO at Homelane, India’s largest start-up in the home décor space. Highlights of the webinar include:  Planning ESOPs early on for the long ..read more

As a founder, the equity in your company is one of its most significant assets. Building a successful company requires leveraging capital and giving tangible benefits to your employees. One of the compelling propositions is granting stock options to your employees. However, in employee stock ownership plans (ESOPs), ownership is necessary for hiring and retaining talent that requires building an ESOP pool. In this article, we discuss some of the critical factors to help you determine the size of your ESOP pool. What is an ESOP Pool? An ESOP pool is the employee-only portion of a company’s shar ..read more

A company’s human resources are undoubtedly its most valuable asset; especially in its early stage when the company or the startup needs to build trust among its employees.  But what will motivate employees to stay with the company? The answer is good incentives and appropriate credit for their hard work. This is not always about money; there is another way of rewarding employees for going the extra mile. It is known as Sweat Equity Shares. Answers to Some of the Commonly Asked Questions About Sweat Equity According to the US national accounts, the value for sweat equity in the private bu ..read more