Source | economictimes.indiatimes.com | Debleena Majumdar, ET Online
In the midst of the ongoing funding winter, many highly valued startups are seeing a drop in their valuations. Let us look at what this means for senior executives who would have joined the companies with ESOPs as a key component of their salaries and with the expectation of creating wealth as the company grows.
While the value of the ESOP is notional till the company raises further money, lists on the bourses, participates in a merger or acquisition, or undergoes a similar value-creation event, many companies did buybacks of ESOPs during the funding highs of the past few years. This generated some wealth for employees.