In our last insight, we discussed how most ESOP over-commitments happen at the hiring stage — driven by urgency, negotiation pressure, or external benchmarks — and why having a clear framework is essential to avoid dilution regret and misalignment.

This note takes the conversation one step further: from design to execution.

Even with a well-crafted ESOP framework, execution often breaks down at the offer stage. The missing link? Hiring teams often do not have access to the design logic and budgets when making equity offers. That is where a Hiring Calculator or an equivalent governance tool becomes critical. It helps translate design into execution by simulating grant size, checking against pool limits, and highlighting P&L impact before the offer goes out.

Here are the common execution gaps we observe and how a hiring calculator (or equivalent logic) can help solve them:

Breakdown Point What breaks in Execution? How Hiring Calculator (or equivalent logic) can help?
Missed Grant logic
  • While the framework sets ESOP budgets and logic by role, offers are often made in ₹ terms to match a candidate’s CTC or prior ESOPs.
  • The actual number of ESOPs, vesting terms, and exercise price are specified later — often without full alignment with the original grant budgets set.
  • Locks in the number of ESOPs permitted, their equivalent ₹ value, vesting schedule, and exercise price per role from day one — ensuring consistency with the grant math set during the design stage.
Lack of Pool Visibility
  • Hiring teams may not have a live and integrated view of past grants, pending commitments, and upcoming hiring plans at the time of making an offer.
  • This can result in higher-than-planned pool usage and potential dilution concerns.
  • Tracks ESOP pool usage in real time, factoring in past grants and live offers — enabling hiring decisions that stay within approved dilution and allocation limits.
P&L budgets compromised
  • Offers made in ₹ terms are later interpreted differently at the time of grant — due to variation in exercise price or assumptions on how value was to be delivered.
  • This often leads to higher-than-expected ESOP cost, only discovered during account finalization.
  • Estimates the accounting charge for each offer upfront — flagging potential breaches and ensuring offers stay within the P&L budget set at the design stage.

As companies grow, ensuring ESOP offers are made with the same discipline as they are designed becomes critical. At Veritas, we work closely with companies at different growth stages to help build effective ESOP structures that align with business and talent needs and are implemented effectively. If equity is part of your hiring process, we would be happy to help.

Should you have any comments or thoughts or feedback, please feel free to share write to us. We would love to hear from you!

Vichitra Malhotra

Vichitra Malhotra, FIAI

Founder and Consulting Actuary

v.malhotra@veritas-india.com

+91-9372876627

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