Flipkart’s recent announcement had everyone sit up and take notice.

For the first time, an Indian startup had announced a corpus of $100 million (Rs 650.57 crore) to buy back shares from close to 6000 current and former employees. This got India’s largest e-commerce company brownie points for helping its employees realise the value of employee stock options (ESOPs) in the fourth and the most significant buyback event since 2013. The inclusion of former employees possibly turned their peers green with envy.

Other members of the Indian ‘unicorn’ club are now breaking into a sweat. Peers such as Quikr (incorporated in 2005), Zomato (2008) and Ola (2010), among others, need to step up.

Anyone who works for, or has worked, in a startup would know that ESOPs are treated with caution. No buyback or liquidation events in the form of IPO for the new age companies is a deterrent for potential employees. “I was distraught when we would go out to hire engineering graduates in 2010 who did not factor in the 15% ESOPs component while making a decision about joining the company,” says Mekin Maheshwari, former head of HR at Flipkart who believes that the company’s ESOPs have been the best move towards hiring talent from the Valley and marquee businesses in the recent times.

Things might have changed for Flipkart and a few others, but as a part of the startup workforce, employees must be prepared for the risk. The promise of owning shares at a future date in the company they are helping build gives employees a sense of ownership and value. When it comes to realising the value of these stocks though…that’s where the bottleneck is.

Decoding ESOPs

Who gets ESOPs in a startup? Depends on the rank and the valuation of the company. Companies the scale of Flipkart offer ESOPs to entry-level engineers, till CXO level hires.

“The practice of granting ESOPs as part of employee compensation has become immensely popular amongst start-ups in the last few years.  ESOPs essentially allow cash-crunched start-ups to substitute a part of the employee’s salary with an opportunity to own a stake in the growth and success of the organisation.  Being great retention tools, ESOPs are typically granted to key employees and the options vest in the employees during the course of their employment,” says Veena Gopalakrishnan, senior employment lawyer at AZB & Partners at Bengaluru.

ESOPs are typically issued from a pool of shares set aside by the company from its total shares. The industry average is up to 5% though it depends on the company. All ESOPs have a cliff of one year at least, following which employees earn the right to ‘vest’ their ESOPs, a portion at a time. In case of Flipkart, the vesting period is four years with 25% of the ESOPs which can be vested every year.


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.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?


Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750


Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750


Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500


Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120


Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50


Single Story

Instant access to this story for a year along with comment privileges.

$ 20



What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.