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Unacademy Tightens ESOP Rules For Ex-Staff, Shorter Exercise Window Sparks Criticism Amid Takeover Talks

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.

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Unacademy Tightens ESOP Rules For Ex-Staff, Shorter Exercise Window Sparks Criticism Amid Takeover Talks

Unacademy has slashed the time former employees have to exercise their stock options. The new rule cuts the window from 10 years to just 30 days. This shift comes as the edtech firm faces acquisition talks and a shrinking valuation.

The company claims the move will help workers secure shares before any deal closes. But the change also brings tax burdens and financial risks for those affected.

Unacademy’s updated ESOP policy now gives ex-employees a single 30-day period to buy all vested options. Previously, they had up to a decade to decide. Founder Gaurav Munjal confirmed he too is subject to the new terms and framed it as a way to let staff benefit before any ownership change.

The policy shift arrives amid reports of a possible Rs 2,650 crore (USD 300 million) takeover by Upgrad. Separately, Reliance Industries and Byju’s have also held talks about acquiring Unacademy in 2025. The company’s valuation has dropped sharply from its peak, raising concerns about the value of its shares.

Investors holding 'liquidation preference' rights could further dilute ESOP holders’ stakes in a sale. Former employees who exercise options must pay taxes upfront—even if the shares later prove worthless. Unacademy has raised over USD 800 million from backers, but its co-founders stepped away from day-to-day operations last September, leaving CEO Sumit Jain in charge.

The 30-day deadline pressures former staff to act quickly or lose their stock rights. Tax liabilities and uncertain share values add to the financial strain. With acquisition discussions ongoing, the policy change could reshape how employees view their equity in the company.

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