Equity, Phantom Shares and Retention Bonuses With Vesting Rules People Understand
Many founders promise equity in an offer call and never write it down. Key people then leave, or stay and doubt what they were promised. GullyHR helps you choose the right instrument, value each grant, fix the vesting terms and issue clear grant letters that your team can read and trust.
Not sure what you need? Tell us about your business in six short steps and we will come to the first meeting prepared.
Share your requirementsWhat is esop and long-term incentives?
ESOP and long-term incentive design is the work of deciding how key employees share in the future value of the business. That means choosing between share options, phantom shares, stock appreciation rights and cash retention bonuses, then setting vesting, eligibility and exit terms. GullyHR designs the plan, models each grant, drafts the plan summary and grant letters, and briefs the people who receive them. It suits Indian founders and owners of startups and growing companies who want to retain key staff.
The starting point
When businesses ask us for this
- You promised a senior hire shares in an interview and nothing is on paper two years later.
- A key engineer or sales lead has resigned and you are wondering whether equity would have kept them.
- You are unsure whether to issue options, offer phantom shares or pay a cash retention bonus.
- Staff ask what their options are worth and you cannot give a straight answer.
- Founders disagree on how much of the company to set aside for the team.
- Early joiners were promised different terms from later joiners, and people compare notes.
- Your company is a partnership or LLP and you do not know how to share long-term value.
- Employees treat equity as a lottery ticket because no one has explained vesting or leaver terms.
What the work covers
We begin with a conversation about why you want a long-term incentive: keeping a few critical people, rewarding early risk, or lining up owners and staff behind a growth plan. We then compare the instruments that fit your legal form and stage. Each comes with its own cost, control and tax questions. Once you choose, we build a model. It values a sample grant, shows vested and unvested value at several price scenarios, and tests whether the unvested amount is large enough compared with annual pay to hold the person. We set the pool size, eligibility bands, vesting schedule, cliff and leaver rules, and draft a plan summary and a grant letter for each person. Your chartered accountant and company secretary or lawyer review the tax and corporate steps. We brief grantees in plain language. A yearly review keeps valuation and grants current.
The choice of instrument is made against your legal form.
Share options, performance shares, phantom shares, appreciation rights and deferred cash bonuses are compared for a company, LLP or partnership, with the control, cost and tax questions each raises.
Each grant is valued before anyone is promised it.
A grant model takes units, strike price, fair value, vesting years and the person's annual pay, then shows vested and unvested value so the offer is honest about what it could be worth.
The size of the pool and who shares in it is decided.
We help you set the share of value kept for the team, the grades or roles that qualify, and a rule for later joiners so early and late staff are not treated as an accident of timing.
Vesting, cliffs and leaver terms are written in plain words.
Vesting years, any cliff, what happens on resignation, dismissal, retirement or death, and how unvested value lapses are set out in a table people can read in two minutes.
Underwater and low-value risk is tested up front.
We check what happens if the price falls below the strike, and whether the grant still holds a person who weighs it against their annual pay, so you add a cash element where it is needed.
Grantees are briefed and the plan is reviewed each year.
A short session explains the grant, the vesting table and the questions to ask the accountant, and an annual review updates valuation, grants issued and the people still unvested.
The process
How it runs
Retention goal and instrument choice
We agree who you want to keep and why, then compare options, phantom shares, appreciation rights and cash bonuses against your legal form and stage, ending with a recorded choice.
Grant inputs and valuation model
With your accountant we enter units, strike price, fair value, vesting years and annual pay for sample grantees, and the model shows vested and unvested value at several price scenarios.
Retention strength and risk test
We compare unvested value with annual pay for each grade, test for underwater cases and decide where a cash retention bonus should sit beside the equity.
Plan terms and leaver rules
Pool size, eligibility, vesting schedule, cliff and leaver treatment are drafted as a plan summary and discussed with founders until each rule has a named decision maker.
Review and grant letters
Your chartered accountant and company secretary or lawyer review the tax and corporate steps, after which we prepare grant letters with a vesting table for each person.
Briefing and annual review
We brief grantees in small groups, hand over a grant register and set a yearly review of valuation, new grants, lapsed grants and people nearing full vesting.
What you receive
- Instrument comparison note with the reasons for the choice recorded
- Long-term incentive plan summary in plain language
- Grant value and vesting model in an editable spreadsheet
- Grant letter template with a vesting table for each grantee
- Eligibility bands and pool-size note for the owners to approve
- Leaver treatment table covering resignation, dismissal, retirement and death
- Grant register listing every grant, vesting date and lapse
- One grantee briefing session and a short employee question sheet
Who it is for
- Founders of startups who have promised equity informally and want it documented.
- Owners of growing private companies who want to keep a small group of critical people.
- Partners in an LLP or partnership who cannot issue shares but want a similar long-term reward.
- CEOs and finance heads who need a plan before the next hiring round or investor discussion.
- Boards and promoters asking how much of the company to set aside for staff.
- HR heads who must explain a grant to employees and cannot yet do so clearly.
Why GullyHR.
We work with Indian startups and growing businesses, where equity promises are often made quickly and recorded late. We write for founders and for the person receiving the grant, so the terms read the same on both sides. We model before we promise, keep tax and corporate steps with your own advisers, and connect the plan to pay, performance and retention so it does not stand alone.
Design the process
Map how the work runs today, then write the procedure, the forms and the approval route it should follow.
Strengthen management
Settle the structure, the roles and the decisions each level can take without the owner.
Develop people
Train the managers who have to run it — the review, the difficult conversation, the handover.
Automate HR
Configure the agreed process in software, so the document and what people actually do stay the same thing.
The difference
What changes
- A plan summary that states the instrument, pool, eligibility and vesting in plain language.
- A grant letter for each person with a vesting table that both sides sign.
- A clear view of what each grant could be worth at low, middle and high price scenarios.
- A cost view so the owner knows the cash or dilution each choice could bring.
- Staff who can explain their own grant and know what happens if they leave.
- A yearly rhythm for valuation updates and new grants, so promises stay current.
How we are measured
Before work starts, we record where you stand. Every later report compares against that baseline.
We choose the measures with you at the start, from the list on this page, and only the ones your data can support. We do not promise a result. We promise a baseline, and a report that shows the change against it, whichever way it went.
The measures we choose from
Time-to-hire
Days from approved vacancy to accepted offer.
90-day attrition
New joiners who leave in their first three months.
Annual attrition
Leavers over the year, by team and by manager.
Payroll and statutory errors per month
Corrections after the run, and returns filed late.
Open compliance gaps
Obligations without an owner or a due date.
Employees with written goals
Share of the team that knows what it is measured on.
Review completion rate
Reviews finished on time, not just started.
Manager training coverage
Managers who have been taught the part of the job they were promoted into.
Working together
Who does what
| Activity | GullyHR | Your team |
|---|---|---|
| Choice of instrument and pool size | Compare options, model costs and recommend | Owners decide and record the choice |
| Grant valuation inputs and price scenarios | Build the model and test price scenarios | Accountant supplies fair value and strike figures |
| Tax, company law and valuation questions | Flag the questions to ask and draft around the answers | Your qualified legal, tax and valuation advisers decide |
| Plan summary and grant letters | Draft the documents and the vesting tables | Owners review, approve and sign each grant |
| Grantee briefing and yearly review | Run the grantee sessions and the annual update | Name an owner for the grant register |
Where the software fits
The model, plan summary and grant letters are delivered as editable documents and a spreadsheet kept in a shared folder you control. The grant register can stay in that folder or move into your own HR system. GullyHR software can hold the register and reminders if you want it, but it is optional and the work does not depend on it.
Ways to engage us
- Instrument and model only
- A short piece for founders who need to choose between options, phantom shares and a cash bonus, with a valuation model for two or three sample grants.
- Full plan and grant letters
- We design the plan, draft every grant letter, brief grantees and set up the register, working with your advisers until the first grants are issued.
- Review of existing promises
- We read what has been promised, in writing or verbally, list the gaps against the plan you want and prepare a clean-up note for the owners.
- Alongside pay and retention work
- Long-term incentives are combined with pay structure, performance review and retention planning so one set of principles covers all rewards.
Good to know
Questions we are asked
No. Phantom shares, appreciation rights and deferred cash bonuses give a similar reward without issuing shares. They suit LLPs, partnerships and companies that want to keep ownership tight. We compare each against your legal form and cost.
That is a decision for the owners, based on how long you want people to stay and the stage of the business. We set out the common patterns, the effect of a cliff and how each reads to an employee, then record your choice.
We do not give tax or legal advice. Treatment depends on your legal form, status and facts and changes over time. We list the questions to ask, then draft around what your chartered accountant and lawyer confirm.
We list each promise, who made it and when, and compare it with the plan you want. We then draft grant letters that put the position in writing, subject to review by your advisers, and the owners decide how to handle differences.
The work is scoped and quoted in writing after a short call. The cost depends on the number of people, the instruments considered and whether you want grant letters and briefings or only the model.
We do not value your shares, give tax or legal opinions, file company paperwork or act as trustee. Those stay with your qualified advisers. We design the plan, build the model, draft the documents and brief your people.
That is the point of the plain-language plan summary and the vesting table. We brief grantees in small groups and give them a short question sheet, so they know their grant and what happens if they leave.
Prefer to talk first? +91 80958 58589 · hello@gullyhr.com