QuirkyPenguin
ESOPS
Hi Folks,
I wanted to understand few things related to ESOPS for unlisted companies.
Let's say, A company(startup) is offering me a package of 20LPA as fixed component and 4L worth of ESOPS(25% vesting) each year.
Consider the date of the above offer date as 1st April 2024 and share value is Rs100/- (1st April 2024) as per the company so ideally 4000 shares
Since 20LPA is fixed component, I'll get the salary after tax calculation - all good here.
On 1st April 2025 , what happens ?
Assumption that share price is constant for one year and has not changed for better understanding.
Ideally I get 1000 shares at discounted price? In general , how much discount is offered.
If I have to buy at a discounted price, is it really beneficial from financial standpoint?
If I'm buying the shares even at a discounted price, why is it a part of CTC since I would be paying it from my pocket?
Requesting folks to help me with the clarification as this will help me in negotiations with future employment
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SnoozyPotato
Stealth8mo
true value of esops is only when there is a buyback or an acquisition.
On buying shares at discounted price
My friend holds a decent amount of esops in zomato. he exercised it at 75 rupee. look at the price now.
If the company has a history if mass layoffs don't have a big amount in esops.
QuirkyBiscuit
Stealth8mo
@grapejuice yes but major are shit
QuirkyBiscuit
Stealth8mo
idk how but depends upon performance
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This means I get 25 lakhs worth of the company shares, which I can purchase at a lower price set by the company which is called the exercise price.
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