"ESOPs made me rich af"
Where did you work and how much money did you make? Asking as it looks like a lot of promise of ESOPs and wealth creation has failed employees in this bloodbath slow growth, layoffs, and job changes.
Brewed
Student
7 months ago
I have had ESOPS in 2 companies
#1 - company got acquired ..I got 45 Lacs IN ESOP ...thats 1.5X of my last annualized salary ( so additional salary for 18 months)
#2 - Company became unicorn ... I quit and company bought my ESOPs . Got 2 Cr
That is 3X of my annualized salary
Company 1 - I had joined at very early stage ; Company 2 - I joined at mid-stage
EvilCemetery
Stealth
7 months ago
That's some amazing numbers👏
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Corpdaaku
Student
7 months ago
Many zomans I know are filthy rich already.
Ex Zoman here. I know a lot of people who made 3 - 10cr. These people stayed at Zomato for six years.
Spoileralert
Stealth
7 months ago
I used to have 65L, atleast that’s what it showed on the portal, now I’ve left the company it’s dropped to 6L
Ps. They did do a buyout and I did encash around 5L
Wow, getting something to materialize from esops is a big deal.
My managers used to say, I would get 2 cr out of my esops 😂
I left with zero.
Spoileralert
Stealth
7 months ago
True.. it is quite rare!
2cr to zero is quite the drop, I think the key is to keep expectations to zero when it comes to ESOPS
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Old employees higher ups have huge salaries. Educator winning wars and get paid a lot. New hires aren't paid so much. Unsure about the valuation. Hopes are high.
Why prashant Dhawan left?
He was top educator and 4m subscribers.
He was paid 23cr in last fy
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I had ESOP value of 15 lakh vested in 3 years. Then I left the company and choose not to excercise it because I did not want to pay taxes before liquidation.
After 1 year the company got acquired with very less valuation. Only investors, founders and some early employees made some money. The rest 80% did not get any money.
So, I took the right decision not to excercise otherwise I had to pay taxes and would have got 0 money.
I have cashed out ~30L and have 1.5 Cr of vested esops for future liquidation.
ESOP success stories are real.
This was buyback?
Not IPO I suppose. How many times the value increased?
IPO would’ve been much larger. This was buyback. Value of initial grant while joining increased 50X.
I still wish I should’ve negotiated the deal more on ESOPs than cash when I joined.
Flipkart(folks who joined pre 2017) phone pe and Swiggy employees (leaders and folks who joined pre 2019, and stayed)
Most folks have zero understanding of what ESOPs are and how they work:
1. I know someone who took a loan from family & friends saying (& sincerely believing) that they have ESOPs worth 1Cr. Obviously, he got shock of his life when I explained him. The fool ended up getting a random street-side lawyer to send a legal notice to his present company, saying he was promised 1Cr etc. Got fired. 😪
2. I asked someone how much emergency fund they have.. and they replied 30L in ESOPs. 🤦♂️
3. Most folks include ESOP numbers in their pay and share it with others.
BinaryBillionaire
Stealth
7 months ago
I was happy with my ESOP of 80L, until I saw the comments on this post🤕
D0nkey05
Stealth
7 months ago
Comparison is the thief of joy. - (someone probably).
Spoileralert
Stealth
7 months ago
I have more hope from crypto than ESOPS
Well, here goes nothing.
I joined Dunzo after the Reliance investment and was allotted ESOPs at the peak soonicorn valuation.
Those precious ESOPs are now still at that same paper valuation but worth nothing essentially.
You could call this contrarian investing at its absolute finest.
It’s all luck. Majority of employees at early/growth stage companies never get the money out. “Exit” events are too few and employees are the last ones to be considered.
I feel like there was spree of buy back around 2020-2021 but not much before and after.
I founded a company and exited it when it raised Series B. I was _extremely_ lucky to get the opportunity. There are hardly any secondary sales at series B.
PhonePe has done two buy back and people made good amount.
I personally made 60% of my annual salary in buyback and holding 8x of current salary
Equitymaster
Stealth
7 months ago
I know many people in flipkart, myntra and PhonePe made huge amounts (50lacs and above) when phonepe was split from flipkart as separate entity ans Wal-Mart bought additional stake.
Also, many real estate experts say that bangalore RE boom is due to 6-8k cr being paid to employees as part of above transaction. My wife got some amount too.
Does it make sense to exercise Esops for unlisted companies because we pay tax on it for exercising and later on if we don't get any exit option then we are stuck with losses
I never got ESOPs from companies even when I asked for it. What's the trick to get them or ask diplomatically?
How does taxation work on ESOPs? I can see people talking about not exercising. Isn’t paying tax better than getting nothing in hand?
RKOoutofnowhere
Stealth
7 months ago
Let’s say you have 100 ESOPs at exercise price of INR 10 per share. Each year you get a vesting of 25% . After 4 years you quit the company and say your company has a rule that all vested options must be exercised before 1 year from last day of work ( most companies do - timing differs) . Now you have two choice - 1. Let the options lapse or 2. Exercise and buy your shares at INR 10. If you choose option 2, you are liable to pay taxes for the difference between market value on that date vs INR 10. If the MV is 100 you have to pay taxes which may go upto 40% based on your bracket once the share gets credited to your Demat account. This has to be from your own pocket. Since most startups do not automatically buy back at exit and selling these unlisted shares in secondary market is very difficult, people choose to let the options lapse in the fear of paying high taxes upfront and be stuck with worthless shares if the company goes down
Got it, thanks! Let’s say MV has gone down and I exercise, will the delta get adjusted with LTCG?
PaleAnybody
Stealth
7 months ago
ESOPs in principle doesn't make much money. Very low probability. You are lower down the order Pref shares of investors and then ordinary shares. When valuation drops say from 1bn to say 200mn, for founder with 20% still makes a sizeable money (40mn). An employee holding 1cr of options ends with 20L - not life changing.
And then you also end up paying 30-38% in taxes. Founders pay 20%. Most investors who fund via SG, Mauritius etc pay 0% in taxes.
Wealth creation via ESOPs is an exception. Zomato, Flipkart, Phonepe etc exceptions. Rare events amongst lakhs of employees in start up out there.
Razorpay’s last secondary sale round (2022) was for total 75Mn. Many folks made >1cr, double digit number of people made >5cr, few even with >10cr returns. And max allowed to sell was 30% of vested. So you can estimate their vested unrealised equity.
Versatile_writ
Stealth
7 months ago
Even before, it’s purely based on luck and company’s valuation that people make money.
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