ESOP's Fables: Getting the story right

The concluding article of the quarterly theme on ESOP structures in Indian private companies captures the good-to-have, must-have and strictly forbidden map of the instrument

Employee Stock Option Plan is a key tool to hire and retain top talent in private companies

Startup founders often do not pay attention to chalking up a clear ESOP structure until institutional investors come onboard

Taxation and company governance make ESOP complex to execute. Its structure has to be water-tight to protect the interest of the company and employees

Stringent rules governing ESOP allocation are usually circumvented by startups by issuing other instruments of reward and/or registering in countries outside of India

At 70, when Ashok Soota decided to start over again as an entrepreneur, having worked in fabled wealth creation companies like Wipro Limited and Mindtree Limited, he had some ideas. Specifically around granting stock options to employees. With Happiest Minds Technologies (started in 2011), an IT consulting and services company, he envisioned a venture where employees were committed to building it up right until the Initial Public Offering (IPO).

AUTHOR

Payal Ganguly

Payal started writing news features six years ago and has written on startups, civic issues and education. Currently based out of Bengaluru, she has worked with The New Indian Express in Hyderabad and more recently, at The Economic Times, writing on e-commerce and logistics. A post-graduate in Molecular Biology and Biochemistry, she will be writing on e-commerce, science and technology at The Ken. She firmly believes that Bollywood classics have the power to heal and inspire.

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