Employee Ownership Insights

ESOPs don’t always work, but when they do its magical 5000 Swiggy employees made around 9000 crores in the IPO Some would have made 100 cr plus Many many more would have made 10 cr plus Life changing money for most people and will enable risk taking and another 100 plus startups from this set If you are evaluating offers from startups with significant ESOP component, this is how you should evaluate it For an employee to make meaningful money through ESOPs, 2 things must happen: - Growth in company value - Employee friendly ESOP policies that ensures employees make money when company grows a) Growth in Company Value This is where employees need to think like investors Just like investors are particularly wary of what valuation they are coming in, entry valuations should matter for employees too ESOPs are allotted basis the current valuation The likelihood of a 10x growth in your ESOPs if you are joining a startup valued at 100 million $ is much higher compared to joining a startup already valued at 5 billion $ A 75 lakh ESOP allotment in a 1000 cr valued org with chances of a 10x growth could be a better offer than 2 cr ESOP allotment at a 20000 cr valued org with lower chances of future growth The second thing to judge is the business model and the likelihood of the business to grow( very important for Seed/Series A/B startups) b) ESOP Policies The startup ecosystem is full of stories where employees didn’t make money despite the company growing and having multiple liquidity events. Swiggy, Zomato are examples of great ESOP policy. Many companies have extremely shitty ones Here are the things that should matter most while evaluating policies: 1. Vesting Schedule: The standard is 25% vesting after every year. Any schedule which has higher vesting towards the later years is a red flag Vesting should never be performance linked If performance is bad, it is management’s responsibility to fire 2. Vesting on Leaving/Startups Exit: If you exit, you should retain all options that has vested If a startup gets acquired before all your options vest, there should be accelerated vesting 3. ESOP Communication: There should always be written communication( preferably through ESOP portal) Verbal communication for ESOPs is a huge red flag 4. Strike Price: Strike Price should be as low as possible( Re 1 ideally). This maximizes the value creation for the employee 5. Holding/Exercise Period: Converting options to shares is a major tax liability exercise. With limited exercise period, it becomes impossible for employees to exercise as it means paying up to 40% real taxes on notional capital gains in an asset class that is not liquid Ideally, holding period should be infinite for vested options, even after exit This enables employees to wait for liquidity events without incurring upfront taxation to be paid out of own pocket

My friend was “about to become a crorepati” because his ESOPs were valued at ₹10 each. Ten years later, his cash payout is still zero. Here’s what most people miss. → Over 70% of startups never give a meaningful ESOP exit. → Buybacks, when they happen, are usually partial and discounted. → IPO timelines often stretch 8 to 12 years, if they happen at all. Meanwhile, dilution reduces your ownership every funding round. At exercise, tax is paid on notional value, not real cash. ESOPs can create wealth, but they are optional upside, not guaranteed income. Counting them as savings or security is the real mistake. → Take the salary, build liquid assets, and treat ESOPs as a bonus. That mindset saves money, stress, and disappointment later.

If you are a vertically integrated D2C brand or a manufacturing‑led company, it may be time to rethink who actually owns your factory floor. Why doesn’t your ESOP or ownership pool include the very people who run your lines, maintain your machines and protect your quality every day? What I often observe is a lackadaisical hiring process and a mindset that wage earners are easy to replace and therefore command little loyalty. This thinking is at the heart of one of the biggest structural challenges in Indian manufacturing today. High‑churn models made sense only when skills were basic and output quality was not a differentiator, but that assumption does not hold anymore. Modern manufacturing is skill‑intensive. Quality, yield, waste and on‑time delivery are driven by experienced operators and maintenance staff who hold deep tacit knowledge of machines and failure modes. When they leave, you do not just incur rehiring and retraining costs that can reach 1.5–2x annual salary, you also suffer hidden losses in productivity and defect rates. Some large players are already moving. Mahindra & Mahindra announced a Rs.400–500 crore ESOP programme last year for about 23,000 employees, explicitly including factory workers, to align them with wealth creation and recognise their role in long‑term value. Globally, broad‑ownership firms deliver 5–10% higher productivity and report lower turnover than traditional peers, as employees invest more in firm‑specific skills and stay longer. What ESOPs did for startups in attracting scarce talent, equity-linked pools can do for Indian manufacturing. When your brand and revenue is built on the shop floor, workers cannot be treated as just a P&L line item. Ownership alignment should be your retention and long term strategy. Would love to know your thoughts? Anthropia

Did you own #equity ? Or just the idea of it? A major Indian unicorn recently compressed its ESOP exercise window to just a month. This wasn't a #policy update. It was a wake-up call Because when #markets turn, ESOPs stop being motivational posters and start behaving like what they really are: financial instruments. Here’s what this episode actually exposed: 1️⃣ ESOPs without liquidity are not “wealth” — they are deferred risk. Exercising options in a private company triggers #tax immediately, not on #cash realisation. A shortened exercise window forces a brutal binary choice: fund taxes on an illiquid asset, or walk away from years of earned value. That’s not an employee problem. That’s a balance-sheet decision pushed downstream. 2️⃣ #Capital structure always beats intent. When valuations reset, liquidation waterfalls and preference stacks decide outcomes — not narratives. Common equity sits last. ESOPs sit within common equity. If employees don’t understand where they stand economically, ESOPs quietly turn into morale tools — not ownership. 3️⃣ #Retrospective changes break trust faster than bad outcomes. Equity works on stable expectations. Change the rules after value is created, and something deeper than contracts erodes. The fact that the decision was later paused only reinforces this: equity is as much about governance as it is about legality. 4️⃣ This was never an HR issue. It was a #finance design failure. ESOPs live at the intersection of #valuation , taxation, shareholder rights and disclosure. Treat them as a “people policy” and these episodes are inevitable. The real takeaway for founders and CFOs: If ESOPs are meant to create ownership, they must be designed assuming downside scenarios — not peak-valuation optimism. Otherwise, employees don’t get equity. They inherit risk. CFOs and founders — should 5-year exercise windows for vested ESOPs become non-negotiable, regardless of exit status? Curious to hear where you stand. #ESOP #Startups #VentureCapital #CorporateGovernance #Finance

🚀 #Mahindra recently announced a one-time ESOP grant for 14,000 employees, including factory workers. I found this move significant because, for most working professionals, the real chance to build wealth often comes not from salary increments but from opportunities like ESOPs or RSUs. It reminded me of my dad’s career at L&T. For most of his working years, our family’s financial planning revolved around PF, PPF, and mutual funds. By his late 40s, when we looked at his retirement savings, the outlook was cautious, modest living, with a large portion eventually earmarked for buying a house. And then came a turning point. L&T introduced stock options for long-timers. At first, my dad was unsure if it was worth investing. But we went ahead. That decision changed everything. 🏠 The wealth from those ESOPs helped him buy a house in Bangalore. 🎓 It supported my post-graduation, my marriage, and even financed almost 50% of my first home. Even in Ranjani Mani and my Financial independence journey, RSU's played a significant part. It accelerated our journey towards the goal that had to achieve. That’s the power of stock-based rewards. Salary keeps things going, but ownership creates transformation. Which is why Mahindra’s decision stands out. Including even factory workers in wealth creation is a strong message: every contributor matters. There’s also another side to it. Top talent today evaluates companies not just on pay, but on how quickly they can create wealth and achieve financial independence. When companies extend ESOPs broadly, it does three things: ✔ Builds stronger loyalty within the workforce ✔ Elevates brand perception in the talent market ✔ Attracts and retains the best minds who go on to drive innovation and growth I hope more Indian companies start thinking along these lines. Because when employees share in the upside, the company doesn’t just grow, it thrives. I write about #artificialintelligence | #technology | #startups | #mentoring | #leadership | #financialindependence   PS: All views are personal

At Amazon, ownership isn't optional - it's built into every line of code we write ! As an SDE-2 at AWS, I’ve learned that ownership means you don’t just build the feature — you own the service. That includes: 🔹 Designing scalable systems that hold up under massive load 🔹 Writing clean, maintainable code — because my team and I will be on-call for it 🔹 Thinking through edge cases, cost efficiency, and operational excellence 🔹 Writing narratives that influence not just tech, but product direction It’s intense, but empowering. Ownership at Amazon means you're not waiting for permission, rather you're trusted to figure it out, build it, test it, and improve it. Ownership here means: ✅ You write the docs ✅ You build the system ✅ You monitor and support it ✅ You make it better over time I was recently given a greenfield project: build an internal portal with minimal requirements. I took initiative to research similar tools, draft the design from scratch, and align with leadership through reviews. It pushed me to lead through ambiguity — and own both the vision and execution. That kind of end-to-end responsibility has been the biggest driver of my growth — both technically and as a leader. 💡 What does ownership look like in your org ? #AWS #Amazon #Ownership #LeadershipPrinciples #TechLife #SoftwareEngineering

"Why am I paying taxes on money I haven't even made yet?" That's what Priya (name changed) asked me yesterday, her voice a mix of confusion and frustration. After 3 years at a high-growth startup, her ESOPs were finally worth something substantial – on paper. ₹1 crore worth of shares. A life-changing amount. But there was a catch nobody had prepared her for: Perquisite tax. To exercise those options, she needed to pay ₹30 lakhs in taxes. Upfront. Cash. Out of her pocket. For shares she couldn't even sell yet. "I don't have that kind of money lying around. I've been working 70-hour weeks building someone else's dream because I believed my ESOPs would someday be my financial safety net." Her story isn't unique. Thousands of startup employees face this hidden trap every year. They work nights and weekends, sacrificing higher salaries elsewhere because they believe in the equity upside. Then reality hits: unless your company is a "recognised startup" or you get a secondary exit simultaneously, you're facing a massive tax bill for shares you can't liquidate. It's like paying property tax on a house you might get to live in... someday. Maybe. This is why we built incentiv. We create liquidity programs that help companies take care of their most valuable asset – their people. No more choosing between walking away from hard-earned equity or draining your savings to pay taxes on theoretical wealth. Before you accept your next ESOP offer, ask one simple question: "What's your liquidity plan for employees?" If they don't have an answer, tell them about incentiv. Because your equity should be a reward, not a burden. #incentiv #ESOP #stockoptions #liquidity #StartupLife #EquityMatters #ESOPReality Chetan Pasari Ranjit Sundaram Indranil Tiwary

Last year, I visited Minnesota-based Room & Board, which had recently transitioned to something called an ESOP (Employee Stock Ownership Plan); the furniture maker is now 100% owned by its employees. Not many companies have tried to make an ESOP work. But the structure deserves more attention and consideration than it’s getting. An ESOP can give employees a true stake in a company’s success, which yields more than warm, fuzzy feelings — it can lead to increased productivity and dramatically lower turnover. And if their efforts help the business thrive, it can put significant returns into employees’ pockets. (Just ask the so-called Publix Millionaires famously minted by the grocery chain’s ESOP.) Turning employees into shareholders also has the potential to chip away at the growing US wealth gap. Over the last 50 odd years, the top 0.01% has grown its wealth nearly six times as fast as the bottom 50%. One of biggest drivers of this disparity is the fact that some 40% of Americans own no stock. Most companies perpetuate the problem by granting stock only to those at the very top of the org chart; at an ESOP, all employees get shares in the company. Here's my deep dive into Room & Board and ESOPs for Bloomberg Opinion. https://lnkd.in/ePfXpkYz

In Cyber, “shared responsibility” often means no responsibility. And when no one owns it - everyone pays for it. It sounds good in theory. But too often, I’ve seen “shared responsibility” turn into a game of hot potato: • Security assumed developers would handle it. • Developers assumed operations would catch it. • Operations assumed security had already reviewed it. And the breach? It didn’t care about our RACI chart. In reality, nobody reads the RACI chart until something goes wrong. That’s why I don’t buy into “shared responsibility”. I believe in “ownership culture”. Here’s what ownership actually looks like: • An engineer refuses to deploy a feature because it creates a security gap - not because security blocked it, but because they own the outcome • A product manager delays a release to fix a privacy issue - not because compliance demanded it, but because they own customer trust • A business leader funds resilience programme before the crisis hits - not because the CISO begged for budget, but because they own resilience Ownership isn’t about job titles or org charts. It’s about people taking personal accountability for outcomes that affect others. The shift happens when: • Engineers see vulnerabilities as their problem - not just the security team’s • Product teams treat security and privacy as a feature - not a compliance checkbox • Leaders view resilience as business essential - not IT overhead No tool, framework, or certification can replace that mindset. The real transformation isn’t buying another product. It’s building a culture where people own what they build, ship what they trust, and fix what breaks - without waiting to be told. 💬 What’s one way you’ve seen ownership culture actually work in practice? #CyberLeadership #CyberResilience #OwnershipCulture #TheCISOMind

Last week, I ripped into toxic HR practices. Today, I want to share something different: A 94-year-old CEO just transferred his entire multi-million dollar company to his 700 employees. Here's why this matters for workplace culture: When Bob Moore of Bob's Red Mill passed away recently, his employees didn't panic about a corporate takeover. Why? Because he'd already given them the company. In 2010, instead of selling to the corporations constantly trying to buy him out, Bob initiated an Employee Stock Ownership Program (ESOP). By 2020, the company was 100% employee-owned. Let that sink in: • 700+ employees now own their workplace • They share in the company's profits • They have a voice in its future The current CEO said something that struck me: "We own our jobs. We don't rent them." After years of seeing how companies exploit workers, this shows another way is possible: - Transparent financials - True employee engagement - Shared success For context: When Clif Bar (20% employee-owned) sold for $2.9B, their workers split $580M. That's an average of $488,000 per employee. This isn't just about money. It's about dignity. Trust. Real stake in your work. While I'll keep exposing toxic workplace practices, I'll also highlight companies doing right by their people. Because better workplaces are possible. We just need more leaders like Bob. #EmploymentAttorney #CaliforniaEmploymentLaw #EmployeeRights Disclaimer: This information is for educational purposes only and does not replace professional legal advice. It does not establish an attorney-client relationship. Please consult a qualified attorney for advice on your specific legal situation.