MPL: Startups like MPL change compensation structure, Esops in recession

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Mumbai: After laying off 100 staff in May and closing its Indonesian operations, esports and gaming company Mobile Premier League (MPL) has introduced a new compensation structure, as it strives to break even in a broader context of profitability among startups.

Bengaluru-based MPL introduced a new system aimed at rewarding team performance rather than individual achievement, changed its vesting period Esop (employee stock ownership plan) from annual to monthly and merged fixed and variable compensation.

MPL is among many new-era companies changing compensation structures as they seek to retain key talent despite layoffs amid a funding winter that has hit the tech world globally.

Earlier this year, B2B e-commerce company Udaan changed its Esop policy to quarterly acquisition instead of waiting at least a year.

The one-year lock for Esops is common practice among startups. Esops holders will be hit if their company’s valuation drops in future funding rounds, which many highly regarded Indian startups could potentially encounter in the future.

MPL, which entered the unicorn club in September last year with a valuation of $2.3 billion, said employees would receive their full costs to the business as a fixed component at from this month. Instead of rewarding the best, if the team exceeds the net income goal, its members can earn up to 24% of the exceeded amount, MPL said. “This new approach makes the reward process completely transparent. More importantly, team performance will now take precedence over individual achievement,” co-founder and CEO Sai Srinivas Kiran G told ET.

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In addition, the policy for exercising options acquired after 30 days of exit has been extended to 10 years from the date of acquisition, even post-exit. Unvested options will vest immediately upon the death or disability of a participant.

Anshul Lodha, regional director of Page Group India, which works with top startups, said most big companies are now focusing on developing employee-friendly policies to retain the best. “As the focus now shifts more to profitability, founders are being pushed to think about building a culture in a way that key employees will stay with the company in the current environment,” Lodha said.

Recruitment experts said streamlined hiring and pay raises are now a common theme among startups after a year of frenzied funding driven by greater adoption of digital services during the pandemic.

Supreet Singh, co-founder and managing partner of Native, a human resources and recruiting firm, said other startups could follow in MPL’s footsteps to encourage high-performing individuals to work in teams. “Unlike previous downturns, the Indian market now has mature startups and unicorns for whom culture will become a higher priority,” he said.

“During growth cycles, you don’t have enough time and energy to work on culture… All you’re doing is driving growth and hiring… During a slower cycle, your hiring target becomes lower and your target is that my current team should have the best outcome and productivity and efficiency,” Singh said.

MPL is said to have over 85 million users in India, accessing the platform in over 70 games. Its offerings include a mix of fantasy sports, real money games such as rummy, poker and card games.

“Startups have been able to attract a lot of employees on the basis of past Esops and attractive valuation. If you are the founder, you can no longer attract an employee on the Esop card,” said Page Group’s Lodha. “Now you have to come up with other policies that excite an employee.”

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