Equity Incentives: To Give or Not to Give (Part 1 of 3)

Guest article as published by People Matters

Recently, the booming startup ecosystem in India has invited media headlines on equity incentives, commonly known as ESOPs, leading to large windfalls for employees.

With Flipkart leading the pack, several other startups like Zerodha and Rivigo have also been in the limelight for creating “overnight millionaires” and having a life-changing impact on many employees’ fortunes. This may paint a broadly lucrative picture of equity sharing within India Inc. but the reality is far from it.

Mercer’s 2019 Total Remuneration Survey (TRS) shows that less than one-third of private Indian enterprises grant equity awards – and those that do, extend them primarily to senior management.

In comparison, the prevalence of such awards in developed markets like US, UK and Japan ranges from 50-65% and often also covers middle management. In India, cash has been the primary instrument of compensation historically for a vast majority of companies as it is simple, tangible and effective. But cash has its limits.

Download our detailed report on how equity incentives can present a differentiated value proposition for your employees and increase the effectiveness of your company’s rewards system.

To learn more about Mercer Executive Compensation offering’s please feel free to call us on +91 90712 35505 or email us at mercerindia@mercer.com

Arjun Prakash

Executive Remuneration Practice Leader