Start up employees are now keen on trading off salaries for stocks. Here’s why
BI India BureauOct 23, 2016, 10.39 AM
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It’s a common trend in
Now what happened was even an office boy took home Rs 50 lakh. Citrus Pay’s stock-owning employees (read crorepatis) had found an avenue to encash their employee stock options (ESOPs) to hit the jackpot.
" ESOP s were a lottery, are a lottery and will always remain a lottery,”
"The only thing that's gonna change in the nature of this lottery is the probability of one winning it. As the startups ecosystem in India”, points out
As funding is becoming too difficult to raise, Lawania opines, the trend will continue. This will increase the chances of winning the lottery, he told the financial daily, adding that for a startup employee, there are only two ways to encash ESOPs: either when the company gets listed or when it's bought. While listing is a bleak possibility for any Indian startup, a buyout is a more realistic option. In the past decades, the road to millions was mostly found by tech giants that made public offerings and got listed on the stock exchanges.
"There were many who chose an all-cash package instead of ESOPs,, says Gupta. And recently when they asked if they could revert to ESOPs,
Earlier it was not easy to convince the new recruits in a start up to value-creation opportunity through ESOPs. However, recently the trend is making a shift when the employees are trading off a fat salary package for stock. Some are even taking a pay cut as high as 75% just to ensure that they maximise their chances of a windfall.