Udaan removes 1-year ESOP cliff, opts for quarterly vesting schedule

FPJ Web DeskUpdated: Wednesday, February 16, 2022, 12:35 PM IST
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All future ESOP allocations will vest every quarter, Udaan said./Logo |

Udaan, B2B eCommerce platform, today announced an ESOP policy covering all employees with significant changes which are industry leading - based on what it defines as its philosophy of ‘deep employee trust’ and ‘shared entrepreneurship’.

In a ‘first of its kind program’, Udaan has decided to remove ‘cliff’ vesting for all ESOPs. All future ESOP allocations at Udaan will vest every quarter. The one year ‘cliff’ period is a widely prevalent industry practice that requires employees to wait for one year for their ESOPs to start vesting. Udaan has done away with this waiting period, it said in a press statement.

Meenakshi Priyam, Group CHRO, Udaan, said, “People trust companies with their careers. We felt that the practice of granting ESOPs with a one-year cliff doesn’t reciprocate this trust. As a progressive employer, we have decided to take the lead in balancing the scales in employer-employee relationships in the industry and revamped our ESOP policy. We want to treat all our employees as responsible adults and as equal partners.”

As a part of the revamp, the company also announced that, every employee at Udaan, regardless of their tenure or job profile will be allotted ESOPs under their Annual Performance cycle. Further, these ESOPs will vest at a quarterly frequency and be completely vested within a two-year period - twice as fast as the industry norm of four years.

Following these changes, the overall number of ESOP holders in the company has jumped 400 percent and now covers 100 percent of its employees.

Elaborating on the thinking behind making ESOP grants universal, Meenakshi added, “We made these changes to preserve and strengthen the culture of shared entrepreneurship at Udaan. Our annual ESOP programme creates a pathway for each and every employee to earn ownership in the company through their contributions and commitment. We have seen ownership and leadership being displayed by our people in every part and at every level of the organization. We wanted to create enabling structures to nurture this and to reciprocate our people’s commitment to our mission of creating a world-class institution that will last beyond our lifetimes.”

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