SUMMARY
The program allows all full-time employees to convert upto 25% of their CTC into ESOPs, subject to a minimum threshold of INR 50,000
Meesho has already completed ESOP liquidation plans this year, making the perspective of ESOPs more attractive to employees
At mid and senior-management level, Indian ecommerce companies face attrition as high as 15-20%
Just weeks after announcing a second employee stock ownership (ESOP) buyback plan worth $5.5 Mn, social commerce unicorn Meesho has introduced an annual ‘MeeSOP’ program to facilitate stock ownership for all its employees, irrespective of seniority.
Under the program, all full-time employees will be able to convert up to 25% of their cost-to-company (CTC) into ESOPs, subject to a minimum threshold of INR 50,000. According to the startup, the value of the ESOPs granted in this way would be more than 100% of the CTC relinquished.
“Our repeated and periodic buybacks ensure our employees continue to grow with us. The MeeSOP program takes this commitment further by breaking hierarchies to make every employee an owner. And providing more avenues for wealth creation and tax savings. As we hire more talent, we will continue to provide our team with the means to realize their personal and financial goals with us,” said Vidit Aatrey, founder and CEO of Meesho.
In September this year, Meesho had raised $570 Mn in Series F funding from Fidelity Management and Research Company, B capital Group, Prosus Ventures, SoftBank Vision Fund II, and Facebook, doubling the startup’s valuation to $4.9 Bn.
Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho is an online reseller network for individuals and small businesses who sell products through social media and messaging platforms like WhatsApp, Facebook and Instagram. According to the startup, it registered a 2.8x growth in monthly transacting users and a 2.5x rise in monthly orders in the last six months and currently enables over 100 Mn small businesses and individual sellers on its platform.
According to an ecommerce trends report published by Sensor Tower, Meesho had the highest number of downloads on the Google Play Store in September 2021 compared to all other shopping apps.
Unlike most ESOPs, which have a years-long cliff period or a vesting schedule where employees only receive parts of the equity depending on how long they spend at the company, 100% of the equity will be vested to the employees after just one year.
With junior and middle management attrition rates as high as 15-20% in the ecommerce industry, ESOPs are a talent retention strategy employed often by startups. Cash-strapped startups can also use ESOPs to hire senior-level talent they can’t otherwise afford.
For the employees themselves, ESOPs are a gamble that may or may not pay off depending on how the company fares in the future. For companies that aren’t publicly traded, ESOPs aren’t really worth much unless the company that issued them starts a liquidation programme where they buy back the shares from employees, as Meesho has done twice this year.
