Your Startup ESOP Is Worth Rs 20 Lakh On Paper. Can You Actually Use That Money?
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Employee Stock Options Plans allow workers to hold company shares, but paper value is not always real cash.
- ✓Many startups use ESOPs to attract talent, yet liquidity events remain necessary to access funds.
- ✓Employees must navigate a four-year vesting schedule and complex tax rules at exercise and capital gains stages.
Story at a Glance
- Category
- BUSINESS
- Reported By
- NDTV Profit
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
ESOPs or Employee Stock Options Plans are a fascinating concept of wealth creation. It allows employees of any company to hold its shares, compounding their wealth as the company grows. There are rules that govern how the shares can be liquidated, but if done right, ESOPs can lead to substantial wealth growth for employees.
ESOPs are very popular in India as well. It has gained more traction in the past decade due to a massive rise of the startup culture. Many leading companies now make ESOPs a part of the employee's pay package, hoping to attract the top talent.
But ESOP value on paper is not the same as being able to use that money. Assuming an employee has Rs 20 lakh ESOP. Until there is a liquidity event, that number is theoretical.
Unlock the Full Story with ArthNow Premium
To continue reading this complete financial story and in-depth market context, upgrade to ArthNow Premium. Enjoy unlimited access across Web and Mobile.
NDTV Profit
Read the full, original unfiltered story directly on the publisher's portal.