Does Indonesia lack an ESOP culture?

A pioneer employee of a unicorn startup in Indonesia got some money when they left the company several years ago by cashing out their employee stock option plan (ESOP). The employee didn’t tell Tech in Asia the exact amount, but it was enough to buy “instant noodles for a housing complex” or “siomay from hundreds of stalls.”

“The process was so simple. I only had to tell the founder, who took care of everything,” the employee recalls.

A middle manager at a multinational tech company in Indonesia says that staff could get around 60% profit by exercising their ESOPs after the company lists. Some of them have stocks worth 500 million rupiahs (US$34,200). Once exercised, they could receive 800 million rupiahs (US$54,700) – or about 15 years’ salary for the average Jakartan.

These stories are examples of how startup employees in the country can get a large amount of money from cashing out their shares. Not everyone, however, gets the same privilege.

A former executive says that despite joining Traveloka during its early years, they have no ESOP. “The company didn’t implement the ESOP mechanism until recently,” they note. Traveloka hasn’t responded to Tech in Asia’s multiple requests for comment.

Another Indonesian unicorn, Ovo, hasn’t implemented an ESOP for its employees. But a former company executive publicly mentioned on LinkedIn that one of his jobs was to “manage and process” ESOPs.

Tina Nugraheni, deputy managing director at recruitment agency Monroe Consulting Group, says that stock still isn’t a major draw for the archipelago’s tech talents. “They prefer cash or instant benefit,” she observes.

Achmad Alkatiri, who was a Shopee marketing executive and Lazada’s chief marketing officer, also says that Indonesian workers still prefer higher salaries, so ESOP isn’t popular in Indonesia. “In other countries, most startup employees became rich because of ESOP, not salary,” he said on Twitter.

A lot of this has to do with the lack of major acquisitions or public listings in Indonesia’s fledgling tech scene. Young ecosystems often face a chicken and egg situation: Without good employees, startups are less likely to succeed. But without successful startups that can turn employees into millionaires, there won’t be big exits that make ESOPs attractive.

Tokopedia and Bukalapak declined to respond to Tech in Asia’s questions about whether they have implemented an ESOP program, but former and existing staff say that they’ve done so. A Tokopedia employee also stated on LinkedIn that “advising and drafting” the ESOP procedure is part of her job.

More companies, however, may be seeing the value of ESOPs. Gojek is the only Indonesian unicorn that openly says that it has an equity program for “eligible candidates.” Ex-employees told Tech in Asia that it has been implemented since the company’s early years.

Set it up early

How attractive are ESOPs?

Cashing out

Short-term profits