
Early in their life cycle, most start-ups encounter cash flow problems. Profits tend to be low or non-existent. At this stage, retaining and motivating key employees who can help the company grow also becomes a challenge as such ventures lack the resources to offer compensation that is at par with industry standards. Granting employee stock options (ESOPs) is one solution that is widely adopted by start-ups to deal with the twin problems of liquidity crunch and talent retention. A well drafted ESOP plan can create a sense of ownership among employees so that they are motivated to contribute more, while at the same time reducing the company's immediate cash outflow. Before accepting ESOPs from a start-up company, however, employees need to weigh the pros and cons of this form of compensation.
TO READ THE FULL STORY, SUBSCRIBE NOW NOW AT JUST RS 249 A MONTH.
Already a premium subscriber? LOGIN NOW
What you get on Business Standard Premium?
-
Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
-
Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
-
Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
-
Pick your 5 favourite companies, get a daily email with all news updates on them.
-
26 years of website archives.
-
Preferential invites to Business Standard events.

Subscribe to Business Standard Premium
Exclusive Stories, Curated Newsletters, 26 years of Archives, E-paper, and more!
Insightful news, sharp views, newsletters, e-paper, and more! Unlock incisive commentary only on Business Standard.
Download the Business Standard App for latest Business News and Market News .
First Published: Tue, February 21 2017. 13:13 IST
RECOMMENDED FOR YOU