How to evaluate ESOPs?
How do you understand that Esops alloted in ctc are good enough? Do companies have them fixed as percentage of ctc (ex. 30% of ctc) or how does it work?
What are the questions i can ask to get a better understanding of the Esops? One would be current valuation, last buyback time, what else?
Is there any good resource to understand this?
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All factors aside, for a soonicorn startup that I worked for, esops to cash equivalent was 2:1, for every 1L I gave up on cash, I could get 8L of esops(to be vested over 4 years, so effectively 2L per year)
You need to know if you have to exercise your options when you quit. Some companies have a time limit like you have to exercise your options within 6 months or so. Then you pay tax on imaginary capital gains which might go to 0.
Also always remember that X% of 0 is still 0.
Also, if the company has never done esop buyback in the past, does esop make any sense?