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 Op-Ed in Nikkei explores why #employeeownership is such a natural fit with corporate culture in #Japan — and why it could unlock enormous potential. We’ve always used #kaizen to elevate frontline voice, surface problems, and drive continuous improvement. Over time, I came to see kaizen as a metaphor for what we were trying to accomplish with employee ownership. Pushing stewardship of value — not just problem-solving — to the front line. Creating a self-reinforcing system of continuous improvement. Letting operational gains and cultural strength compound into long-term value — which is then broadly shared. Employee ownership is kaizen for capital. If Japan led the world by empowering workers to improve how work gets done, it can lead again by empowering them to share in the value they help create. Ownership Works!

"Flipkart Mafia": How One Startup Helped Build an Entire Generation of Founders Every startup dreams of building a great company. A few end up building an ecosystem. Flipkart belongs to the second category. Over the past decade, the company has become one of the country's most influential founder factories. Today, dozens of former Flipkart employees have gone on to build high-growth startups across fintech, wealthtech, SaaS, logistics, healthcare, mobility & consumer brands. That's why India's startup ecosystem now talks about the Flipkart Mafia. ✅ More Than an Employer 1. Flipkart was a training ground. During India's early e-commerce years, there was no blueprint for solving problems. 2. Teams had to build those systems from scratch. 3. That experience produced founders who understood how to scale businesses under real operational pressure. Many of them later applied those lessons to entirely different industries. ✅ One Company. Multiple Unicorns Former Flipkart leaders have gone on to build companies like - PhonePe in digital payments - Groww in wealth management - Udaan in B2B commerce - Spinny in used-car retail - Cult Fit in health and fitness ✅ Why Flipkart Produced So Many Entrepreneurs The answer wasn't compensation alone. It was culture. Teams were encouraged to question assumptions, move quickly, experiment continuously & make decisions using data instead of hierarchy. Ideas mattered more than job titles. That environment naturally develops entrepreneurial thinking. ✅ ESOP Effect Culture created founders. ESOPs gave them the confidence to become founders. When Flipkart's acquisition by Walmart unlocked hundreds of millions of dollars through employee stock buybacks, many early employees suddenly had financial security. Instead of worrying about monthly salaries, experienced operators could spend years building new companies. Successful exits didn't just reward employees. They funded the next generation of entrepreneurs. That's how startup ecosystems compound over time. ✅ Let me share the #Rajspectives 1. One of Flipkart's biggest contributions was institutional knowledge. 2. The playbooks developed for logistics, customer acquisition, payments, fraud prevention, warehousing, pricing, and supply-chain management didn't remain inside Flipkart. 3. Former employees carried those capabilities into entirely new industries. Every successful startup they built became another place where future founders could learn. That's how ecosystems grow. The world's strongest startup ecosystems aren't defined by their largest companies. They're defined by what those companies produce next. PayPal helped shape Silicon Valley. Flipkart has played a similar role for India's technology ecosystem. Its greatest legacy may be the founders, operators, investors & innovators who learned there & are now building the next generation of Indian companies. #startup #founders #india #business #investing #innovation

🚀 #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

"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

I was going through my ESOP agreement recently and noticed a pattern across Indian startups. On the surface, ESOPs are marketed as a way for employees to “own a piece of the company” and participate in wealth creation. But when you dig into the agreements, a different picture emerges: You often cannot exercise vested options unless there’s a Liquidity Event (IPO, acquisition, etc.) – which may never happen. Until then, you only hold a beneficial interest via a trust. You don’t actually own the shares. There’s usually a 10-year backstop, but realistically, how many Indian startups IPO or exit in that timeframe? And importantly: most of these details are not shared with employees in the beginning. People only discover them much later, when it’s too late to make an informed decision. What’s worse — I’ve seen that during promotion cycles, a lot of younger folks are “rewarded” with ESOPs and told they now own a piece of the company. But do they really? Or are they just being made fools of with promises that sound good but hold little real value? 👉 This raises a tough question: Are ESOPs in India really meant to reward employees, or are they primarily a retention tactic and PR story ? If startups want to talk about “wealth creation,” the least they can do is ensure transparency from day one. Employees deserve to know the rules upfront, not after signing.

I started my career managing 16 frontline workers on an aerospace factory floor. That experience taught me something no classroom could: strategy alone doesn't drive results. People do. And people perform differently when they have a real stake in what they're building.   When I became a CEO and took a company public in 2017, I made every employee an owner. Real equity. Real stake. Since then, we’ve seen more than 9x enterprise value growth Ingersoll Rand. Attrition down. Safety world-class. Engagement at the 90th percentile.   But the numbers aren't what move me most. It's the employee stories from every corner of the world that remind me why this matters. Ownership isn't a side program. It's a business strategy and a deeply human one. When companies trust their people with real ownership, both employees and shareholders can win. Thank you to Fortune for the opportunity to share my perspective: https://lnkd.in/ep7JpyAB #MakingLifeBetter

There’s a grocery chain in the US you’ve probably never heard of with over 400 millionaire grocery clerks. Hundreds of WinCo foods employees have over $1 million in their retirement accounts.¹ In one store alone, 130 employees have combined retirement savings of roughly $100 million.² This is not only because WinCo is exceptionally well managed, with its stock averaging 18% growth annually since 1986, but also because it is 100% employee-owned through an employee stock ownership plan (ESOP). Every year, the company contributes stock worth 20% of each eligible employee's pay into their ownership account. Employees contribute nothing.¹ If you run the math, this means a worker who received $5,000 in stock in 1986 is sitting on nearly $863,000 from that single year's contribution alone. Most people would hear these numbers and think of a hyper-growth tech startup minting millionaires off a lucky IPO. But it's a grocery chain in Boise, Idaho that barely advertises itself. WinCo has quietly become the fourth-largest ESOP in the country with over 20,000 employee-owners across 140+ stores.³ Its success story is in no small part due to the incentive structure. There’s direct alignment between effort and business outcomes. When the store performs, the stock grows, and staff see their net worths grow.

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

There's a clear pattern that separates thriving workplace cultures from struggling ones. It's not fancy perks. It's not even compensation. It's whole company ownership - not just at the top. Employees become leaders at all levels of the company. When all employees take full responsibility for outcomes - good and bad - something remarkable happens. Teams become energized. Innovation flourishes. Problems transform into opportunities. It's the whole company mindset that transforms organizations into places where people truly love to work - and perform, stay, and want to work for you even more. Here's what this looks like in practice: - When market challenges arise, exceptional employees ask "How can we adapt?" rather than blaming external factors. - When systems aren't working, they focus on building solutions rather than complaining about limitations. - When teams struggle, they examine their own leadership approach first, not team capability. This ownership mindset is consistently present in organizations we've certified as Most Loved Workplaces®. Take it from research: Best Practice Institute and Harvard Business Review research found that leaders at all levels (all employees) who practice extreme ownership are 4x more likely to exceed performance targets. Three questions worth reflecting on today: 1. What challenge are you currently facing that needs a fresh ownership perspective? 2. Where could taking more responsibility open new possibilities? 3. How might you model this mindset for your team? The moment we stop making excuses, we start making progress. This ownership mindset shows up in my interview with Lightfully Behavioral Health CEO Jennifer Steiner , a Most Loved Workplace, when we talk about the magic that happens when employees at all levels, become owners of the vision, values and mission - and everyone wins, including customers (in this case employees, partners, patients and excellence patient outcomes). https://lnkd.in/eTDJF6gR What leadership challenges are you navigating right now? I'm genuinely curious. Scott Baxt Melody Marks Mel Cholger Tracy Cohn #LeadershipMindset #WorkplaceCulture #OrganizationalSuccess