GroovyLlama
GroovyLlama

Esops - what should I know?

Have been granted esops recently. What are the critical points that I should be mindful of before signing the esop policy (apart from the regular - vesting schedule, exercise price, etc.)? Anything that I should take note of or ask particularly?

26mo ago
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FluffyLlama
FluffyLlama
FamPay26mo

You can't do much. You won't even get to read the ESOP policy. You'll just get a one page grant letter.

Also, if you don't like anything, it won't matter since it's the same policy for every employee.

So, stop worrying about it. Just remember one thing - you can't do anything as an employee

GroovyLlama
GroovyLlama

Monday motivation 💪

GoofyDonut
GoofyDonut

When are they exercisable is quite important. Some startups will allow yearly buybacks, where you can sell part of the esops directly, they’ll handle taxation and all that Some allow you to “exit” directly form esops to cash during a new round of investment/exit/liquidity events, this is preferable to you vesting/converting the esops into stocks as you don’t have to pay income tax from the exercise (now I think I read somewhere income tax is not paid anymore for esop exercise?, can’t confirm this though)

GroovyLlama
GroovyLlama

Any way to know/ask at what valuation am I getting these esops?

GoofyDonut
GoofyDonut

Yes, just ask?

DizzyWaffle
DizzyWaffle

@LangdaTyagi has answered perfectly. Of course if you have questions do ask. You may or may not get an answer always. Sign the documents, keep in your locker, work hard and ask everyone in the co to work hard for the next 7-10 years.
If things go fine, you are lucky, reap the benefits.

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