A closer look at Circles Life’s ESOP

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Hello reader,

What are your thoughts on employee stock option plans (ESOPs)? I’ve long concluded that it’s not something I’d be keen on. Having liquidity is important to me, and I’m not sure that I’d be able to stay at a company long enough to see my stock options vest and be able to cash out, given the uncertainty of the world we live in.

There are many other folks in Southeast Asia who have similar sentiments, which is why ESOPs aren’t really a thing in the region, despite the growth in its tech and startup scene. Still, ESOPs, when done properly, can help a company attract and retain talent and provide opportunities for employees to reap the rewards of their faith in the firm. That’s what Circles Life is aiming to do with its own ESOP scheme.

Today we look at,

• Circles Life’s ESOP plan and what makes it different
• Vietnamese payment firm MoMo’s latest acquisition
• Other newsy highlights such as Carsome’s latest fundraise and Carousell’s potential route to the public market

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Taking a closer look at Circles Life’s ESOP

Image credit: Timmy Loen

ESOPs aren’t very popular in Southeast Asia. While some founders see them as a way to attract talent, many employees remain skeptical. In Singapore, telco firm Circles Life is shaking up this perception with its ESOP program, which it says is “the most generous in the region.”

• G is for generosity: Circles Life runs its stock buyback program roughly every 18 months, allowing employees to sell vested stocks back to the company at regular intervals. The firm also issues two months’ worth of stock options as part of their basic compensation to employees, regardless of rank or tenure, every 12 months and has a short vesting period of just a year, as compared to three to four years at other companies. It’s strike price is also near negligible, at around US$1 a share.

• Make me a believer: Circles Life says its ESOP is a key aspect of how it attracts talent and turns “employees into believers.” According to co-founder Rameez Ansar, the firm finances its buyback program with cash on its balance sheet, allowing it to create liquidity for employees “from a position of strength.”

• On the flip side: However, it’s hard to tell if Circles Life’s approach to ESOPs is all that effective. Some feel that the firm’s short vesting period may keep it from achieving its goal of retaining talent, while others say that its founders need to be sure that they’re using their cash for the best purposes.

Read more: ​​Circles Life’s ESOP breaks new ground. But is there a trade-off?

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