Trying to push ESOPs as part of compensation?
ESOPs, simply put are options to buy stock at a strike price that is supposedly preferential over a future stock price when the holder of stock can book a profit and sell shares. Very similar to what one can do at stock market any day. The difference is that these are stocks of unlisted companies and hence upside upon listing can be large. Its a bet that entrepreneurs and investors take, both equipped with an appetite to see that upside not coming as well.
Employees on the other hand sell their time and skill to achieve their defined goals, expect to be paid for their time and the outcomes that they create. Most employees do buying and selling of shares through regulated stock markets in their countries if they want to. Most employees view compensation as a payback for their effort, large part of it assured and timely.
So from assurance and timeliness perspective, the payback preference would look like fixed pay, followed by benefits, followed by tenure based bonuses, then outcome based variable pay and ESOPs may not even figure in this list for most. This is not to say that the stock options do not carry potential to create value, in fact if gone right, all other compensation components would appear pale in comparison. But there is a big IF and most employees do not take up employment for that kind of betting.
In fact a far more powerful component is variable pay that most companies fail at executing at remarkable efficiency. Beauty of variable pay is that it can be linked to shorter performance periods and earner's list can be displayed on notice board for all to see. When employee sees colleagues making money quarter on quarter, she is more likely to sign in. So powerful is the effectiveness of variable pay program that turning ESOPs into Ghost stock options has started making more sense. Ghost stocks are just another name for variable pay program.
So sneak in your ESOP in their lives if you wish to, but not before you have started executing the variable pay program well. That is what employees are more likely to buy as compensation.