Online bus ticketing portal redBus.in which was acquired by Naspers subsidiary and Ibibo owner MIH India in June 2013, is witnessing multiple exits at the senior management level, reports NextBigWhat citing sources. It says about a dozen senior employees have already quit the company and a few more are on their way out.
Its worth noting that redBus founder & CEO Phanindra Sama has not responded to the publication yet. We tried contacting redBus CEO Phanindra Sama and SeedFund managing partner Mahesh Murthy on this but we’re yet to hear back from them. We’ll update in case we hear back from them.
Sources told the publication that the reason for this exodus was largely due to issues relating to how the employee stock options (ESOPs) were dealt with, since only the founding team and select employees (not more than three) benefited majorly from acquisition while the rest of employees were left out.
Apparently, redBus chose the employer securities option, through which the acquirer (in this case MIH India) provides preferred or common stock in its company based on the ESOP structure of the acquired company (in this case redBus), rather than choosing accelerated vesting option which converts stock options to shares and employees would’ve made money at the acquisition times.
Interestingly, at a recent conference, Sama had talked about the trickiness in judging if startups should provide stocks to every employee or restrict the stock options to select employees and how much stock should they give to employees, since they have a limited amount of stocks available. He said –
“We formulated a program to restrict the stock options to only senior management and early employees. However, if we had known we are going to exit after seven years at this price, then we would’ve done this differently and would’ve provided stocks to more number of people, but that’s always uncertain.
Another problem is that the company’s life is uncertain. It could be 20 years or 40 years or 7 years, during which the company management could change several times and you will have to accommodate all of them” (read more)
We’ll update when we have more. In case you have any additional information that you would like to share, please use our anonymous tip box. Please refrain from posting personal and libelous comments below.
– Redbus-Naspers: Revenue, Shareholding From FY12, Multiples
– “Exits Are Rare In India. When One Comes Along, You Take It”: Phanindra Sama – StartupCentral
– Key Events In redBus’s Journey : A Timeline