Startups hike salaries by 8-12%; stock options gain ground: Report

To be sure, 25 percent of the startups also deferred salary increments of one or two quarters.

Startups in India offered salary increases in the range of 8 to 12 percent for the current year, while entry- and mid-level employees got the highest hike of 15-20 percent, according to a report.

The performance continued to hold 50 percent of the weightage in increments, and taking on additional responsibilities and getting a promotion factored in about 20 percent, according to Elevation Capital’s Startup PayPulse Report 2023.

Other aspects were new assignments/career progression (15 percent), inflation and market competitiveness (10 percent), and unspecified factors (5 percent).

For leadership roles such as CXOs and function heads, the report highlighted that exploring stock-based increments turned out to be more appropriate while also planning to reassess the cash component in a few quarters.

“We found that 50 percent of companies were looking at offering additional equity grants, largely in response to the subdued cash increments. While many of these companies are still in the deliberation phase, a portion of them has already moved forward with the decision to offer these equity grants,” Kallan H, VP of talent at Elevation Capital, told Moneycontrol.

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To be sure, 25 percent of the startups deferred salary increments by one or two quarters. Performance payouts or variable bonuses were 50-100 percent of an employee’s variable component. However, companies did not apply any multipliers to these payouts.

While employers prefer a hybrid model to permanent in-office work for their staff, they are still formulating a structured approach to this. Employers may let their staff work remotely for 40-50 percent of the workweek.

ESOP trends

Among the companies, 80 percent offered an Employee Stock Ownership Plan (ESOP) with a vesting cycle of four years, while the remaining had a vesting period of more than four years.

ESOP allocation typically constituted 10-50 percent of the cash component offered to candidates for entry to mid-level roles in startups ranging from Seed to Series B stages. Those in leadership positions received ESOPs ranging from 0.2 percent to 1.5 percent of a company’s equity. Additionally, they were increasingly considered a tool for increments for leadership roles in 2023.

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Given the muted cash increments in the past financial year, 50 percent of companies explored offering additional equity grants to leaders. Besides, the acceptance rate was higher at senior levels – at about 80 percent.

Among entry- to mid-level employees, ESOPs were gaining ground, with 40 percent to 50 percent viewing them favourably.

Salary trends

Some of the critical roles filled among the first few hires at early-stage companies are chief of staff/founders’ office, growth hackers, and finance. For all three categories of roles combined, there was a 40 percent jump in demand this year.