How to evaluate ESOPs?
How do you understand that Esops alloted in ctc are good enough? Do companies have them fixed as percentage of ctc (ex. 30% of ctc) or how does it work? What are the questions i can ask to get a better understanding of the Esops? One would be current valuation, last buyback time, what else? Is there any good resource to understand this?
You need to know if you have to exercise your options when you quit. Some companies have a time limit like you have to exercise your options within 6 months or so. Then you pay tax on imaginary capital gains which might go to 0.
Also always remember that X% of 0 is still 0.
All factors aside, for a soonicorn startup that I worked for, esops to cash equivalent was 2:1, for every 1L I gave up on cash, I could get 8L of esops(to be vested over 4 years, so effectively 2L per year)
Also, if the company has never done esop buyback in the past, does esop make any sense?
