In India’s fast-paced fintech sector, Employee Stock Ownership Plans (ESOPs) have become synonymous with innovation-led growth, particularly as organisations chase scale in highly competitive environments. Often framed as a powerful tool for attracting and retaining top talent, ESOPs are increasingly touted as enablers of wealth creation. But are they truly delivering meaningful value for employees, or are they still functioning more as aspirational retention devices?

“In the fintech space, ESOPs are considered a crucial tool for talent retention, with wealth creation often emerging as a by-product of the company’s growth journey,” said Amit Sachdev, Co-founder & COO of M1xchange, India’s first RBI-approved digital platform. He noted that while companies battle for both market share and talent, ESOPs have emerged as a strategic mechanism to link individual contribution with organisational success.

Sachdev added, “As these startups mature into unicorns and eventually go public, the value of ESOPs is realised not just by founders and investors, but by the professionals who powered those journeys.” He argued that ESOPs help create a thriving culture of ownership — one where employee loyalty and high performance are both nurtured and rewarded.

This sentiment is echoed by Gautam Udani, Co-founder & COO of the Veefin Group of Companies, who believes that when executed transparently, ESOPs can be transformational. “ESOPs aren’t perks — they’re power,” he said. “At Veefin, we’ve made our ESOP plan inclusive, extending eligibility from the janitor to the CEO. That’s how you create real value and ownership.”

Veefin’s model, especially as a listed entity, offers employees the clarity and liquidity that many early-stage startups struggle to provide — a crucial ingredient in converting potential wealth into actual gain.

From retention tool to wealth engine

“ESOPs are no longer just retention tools but genuine engines of wealth creation,” asserted Sanjay Tripathy, Co-founder & CEO of BRISKPE. He noted that as the Indian fintech landscape matures, companies are becoming more deliberate in designing ESOP structures that foster long-term loyalty and participation in collective growth.

“At BRISKPE, our ESOP program is designed to reward those who commit to the long haul. We want our employees to grow with us — not just professionally, but financially,” said Tripathy. The focus here is to build financial well-being through meaningful equity participation, especially as employees increasingly seek benefits beyond salary packages.

Despite rising adoption, one of the most persistent challenges around ESOPs is the knowledge gap. Many employees are unsure of how stock options work, what tax implications they carry, and under what conditions they can be exercised or monetised.

To unlock ESOPs’ true potential, fintech leaders agree that education and communication are key. “Too often, ESOPs are just a piece of paper wrapped in financial jargon,” said Tripathy. At BRISKPE, they’ve implemented regular workshops and provide jargon-free documentation that simplifies complex concepts such as vesting, liquidity, and taxation.

Sachdev agrees, adding that fintechs must invest in consistent internal communication supported by structured learning initiatives — from one-on-one advisory sessions to digital FAQs — to demystify stock options for their teams.

At Veefin, Udani shared that employees are given real-time visibility into their options, with constant access to transparent data and channels for queries. “Better education turns ESOPs from a vague promise into a powerful tool for wealth and motivation,” he said.

In sectors characterised by high growth and high burn, traditional time-based vesting may no longer suffice. Instead, there is growing consensus around linking ESOPs to performance and milestone achievements.

“ESOPs should combine performance-based vesting with thoughtful equity allocation,” said Sachdev. “A hybrid approach — mixing traditional options with RSUs (Restricted Stock Units), and tying grants to key business goals — can better align employee interests with long-term company success.”

Udani added that ESOPs should not be treated as part of the annual appraisal cycle. “In evolving sectors, the reward should follow the impact, not the calendar. That may mean granting ESOPs three times in a year or once in three — it must reflect contribution and commitment.”

Tripathy noted that at BRISKPE, simplicity is also key. “We keep the ESOP structure fair and clear, regularly reviewing it to reflect both the company’s growth and market realities.”

The trust deficit: Addressing governance gaps

While ESOPs promise long-term value, they can also cause disillusionment when buyback terms are opaque, valuations inconsistent, or liquidity timelines uncertain. Leaders caution that without strong governance, the ESOP dream risks becoming a mirage.

“To build trust, companies must prioritise transparency and governance,” said Sachdev. He recommended establishing independent valuation mechanisms, creating employee representation on ESOP committees, and offering clear, accessible documentation.

At Veefin, public listing brings a natural layer of transparency, but Udani stressed that even private firms can foster trust through regular updates, consistent reporting, and third-party audits.

Tripathy believes in clear, fair disclosures. “We ensure employees are well-informed about how valuations are done, and maintain regular communication during key liquidity events. That way, employees stay connected to their stake.”

Ultimately, it is up to the founders and boards to balance the scales — between company growth, cap-table management, and employee wealth creation.

“Founders and boards are at the core of shaping ESOP strategies,” said Sachdev. “They must strike the right balance: protecting equity while making sure the stock offered holds real, long-term value.”

Transparent communication, alignment with business milestones, and thoughtful cap-table planning are critical responsibilities of the leadership. When handled with care, ESOPs become more than instruments of compensation — they become part of the company’s purpose.

Udani reinforced this with a practical insight: “When done right, it’s not just about splitting shares. It’s about sharing the mission.”

A model in motion

The Indian fintech sector’s relationship with ESOPs is maturing but not yet mature. While several organisations — particularly those that have achieved scale or public status — are creating real wealth for employees through structured and transparent ownership models, many others remain at the experimentation stage.

From the discussions with leaders at Veefin, BRISKPE, and M1xchange, one clear message emerges: ESOPs are only as powerful as the clarity, structure, and intent behind them.

If fintechs want to unlock the full potential of their talent while ensuring loyalty in a fiercely competitive market, then they must treat ESOPs not as afterthoughts but as strategic levers of trust, transparency, and tangible value.