This document discusses the top 5 challenges with designing and managing employee stock ownership plans (ESOPs) for unlisted companies, as presented by Harshu Ghate. The top challenges are: 1) determining the appropriate instrument structure, including whether the options are cash or equity settled; 2) developing thorough plan documentation and legal contracts; 3) effectively communicating the value of ESOPs to employees; 4) managing the exercise process for separating employees; and 5) ensuring ESOPs are implemented in a way that works long-term through regular communication, transparency, and liquidity. The presentation provides examples and best practices for addressing each of these challenges.

1. Topic: The 5 biggest challenges with
designing and managing ESOPs
Presented by: Harshu Ghate
Co Founder and Managing Director
ESOP Direct

2. Agenda
Key Trends and Practices – in unlisted companies
•Top 5 Challenges
•Q & A
1
2
3

3. Key trends in ESOPs – unlisted companies
Are ESOP goals
achieved?
The reasons
Plans succeeded
partially
Employees
covered
Grant
frequency

4. Expected benefit
from ESOPs
Vesting
schedule
Vesting
conditions
Key trends in ESOPs – unlisted companies

5. Exercise
terms
Liquidity
terms
How are Options with
Separated employees
handled?
Key trends in ESOPs – unlisted companies

6. Frequency of communication with employees
Grant acceptance practices
Pain points in Plan management
Key trends in ESOPs – unlisted companies

7. Top 5
Challenges in
Designing and
Managing
ESOPs
1. Instrument structure
2. Plan documentation
3. Communicating “Value”
4. Managing Exercise process
5. Making ESOPs work

8. 1. Instrument
structure
Cash /
Equity
settled
Whom to
Grant
Vesting
conditions
Quantum
of Grants
Dilution
• At which stage to implement ?
• Grants to non-employees /
Consultants
• Impact on Cap table

9. 2. Plan
documentation
Lose
documentation
Grant acceptance
Legal contracts Best practices

10. 3. Communicating
“ Value”
What is “Value” ?
Communicating Value
Best Practices

11. 4. Managing
Exercise
process
Separating
employees
Payments
/ Funding
and Issue
of shares
Overseas
employees
Impact
on Cap
table

12. 5. Making
ESOPs work
- Communication
- Transparency
- Liquidity
- Grant more to few - regularly

13. About Speaker:
Harshu is the Co Founder and Managing Director of
ESOP Direct. Having worked closely with Private and
early-stage companies, he understood their wants
and strategized the carve out of ESOP Ezee from
ESOP Direct offerings. He is actively involved in
productising the service, design of the platform,
stitching up partnerships and alliances of
complimentary service providers. You can reach out
to Harshu at harshu@esopdirect.com
Harshu Ghate
Managing Director
Disclaimer
The materials and information on this presentation have been prepared or assembled by the Firm and are intended for informational purposes only. Any opinions
expressed on or through this presentation are the opinions of the individual speaker and may not reflect the opinions or guidelines of the Firm or the Industry.
ESOP ezee do not accept or assume responsibility for any other purpose or to any other person to whom this note is shown or in whose hands it may come.
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info@esopezee.com
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manage the entire life-cycle of ESOPs in early stage and
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our clients to make ESOP successful.