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Unacademy has reduced the ESOP exercise window for former employees from 10 years to 30 days. The change comes as the edtech firm discusses a possible acquisition at a much lower valuation, raising concerns among ex-employees about taxes, fairness, and the value of their stock options.

Mumbai: Unacademy has changed its employee stock option (ESOP) rules for former employees. Earlier, employees who left the company had up to 10 years to buy the stock options they had earned. Now, under the new policy, they must exercise these options within just 30 days of leaving the company.

The company also announced a one-time 30-day window from the date of the revised plan. During this period, former employees can buy all the options they had earned while working at Unacademy.

Tax Burden Adds to Employee Worries

In an email sent to former staff, Unacademy clarified that exercising ESOPs will lead to immediate tax payments under Indian law. This means employees may have to pay taxes even before they gain any real financial benefit from the shares.

This announcement led many former employees to criticise the move on social media, saying the short window and tax burden make it difficult to benefit from their ESOPs.

Deal Talks Behind the Decision

The policy change comes at a time when Unacademy is in talks with Upgrad for a possible acquisition. According to founder Gaurav Munjal, the deal is being discussed at around Rs 2,650 crore (about USD 300 million). This is much lower than Unacademy’s last valuation of USD 3.4 billion in 2021.

Because of the lower valuation, investors may use “liquidation preference,” which allows them to get paid first in a sale. If this happens, ESOPs could become worthless.

Founder Explains the Company’s Stand

Munjal said the ESOP move was meant to help employees get shares before any deal happens, so they can still have some stake in the merged company. He added that even his own ESOPs are affected and apologised for the situation.

Background and Leadership Changes

Unacademy has raised over USD 800 million from investors like SoftBank, Temasek, and General Atlantic. Munjal and cofounder Roman Saini stepped back from daily roles in September, with Sumit Jain taking charge as CEO.