For better part of this week, the following image has been doing rounds on social media in the startup community in India, engaging people in their favourite pass-time: scandalmongering.
This is true, but you are wrong!
In our ill-informed little minds, whenever we see ‘Remuneration’ amount, we just divide that by 12 and assume that that’s the amount paid by any company through RTGS to that employee each month. That’s now how it works.
We don’t stop to think that the guys who’ve built the largest startup that India has ever seen, might be a little smarter than this, or, smarter than us, for that matter! Also, articles like these never help:
Here’s why this is ok!
In early stages of a company, in order to retain an important team member, they offer ESOPs. We do at Gridle as well. ESOPs are employee stock options; you can read up a little more on them here. If you want to understand how they work, check out Yourstory’s article on the subject.
What’s essential here to understand is that ESOPs are shares of a company that grow in value along with the company and are vested to the concerned employee over a period of time, much like how salaries work. But, since the valuation of Flipkart grew multi-fold within a year, for a couple of years consecutively, their early employees, most of whom stated in the table above, also saw the same increase in their ESOPs; and rightfully so. That’s the point of ESOPs: To connect gains of an employee with gains of the company!
I know that at this time, your gossip stricken mind still wants to believe in the sensationalised headline that you saw in the image above but that’s just not true. A large part of the respective amount is ESOPs which Amazon did not have to offer to anyone when they entered India considering they already had a brand established and had no problem attracting & retaining talent. If you still want to know more, check out compensations of some early employees at Amazon.com and you’ll realise.
No Masseuse, however good, makes that kind of money; but she was an early employee and that’s how it works with Startups.
Here’s what Flipkart also responded with:
“The remuneration figures cited include a significant portion of liquidated ESOPs that had been accumulated over the years… The law does not require liquidation of ESOP details to be separately stated and the (RoC) filings have been made by disclosing all the particulars mandated by the law.”
What this means?
It’s nothing out of the ordinary.
RTGS of crores is not being made.
Sachin & Binny are not stupid people.
Let’s get back to work.
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