Unacademy Slashes ESOP Exercise Window to 30 Days
Unacademy, once valued at $3.4 billion, has sparked significant controversy by drastically reducing the period former employees have to exercise their vested stock options.
In a move communicated to ex-staff on December 20, 2025, the company shortened the exercise window from the previous 10-year period to just 30 days.
This policy shift forces former employees to make an immediate financial decision: pay significant taxes to convert their options into shares or forfeit their earned equity entirely.
A Massive Strategic Shift: From 10 Years to 30 Days
The amendment to Unacademy’s 2018 ESOP plan represents a stark departure from the employee-friendly policies typical of high-growth startups.
Previously, departing employees enjoyed a decade-long “safety net” to exercise their options, allowing them to wait for a lucrative “exit event” like an IPO or acquisition.
Under the new rules:
- Active Exits: Employees leaving the company now have only 30 days from their last working day to exercise their vested options.
- One-Time Window: Former employees who left prior to this amendment have been granted a one-time 30-day window (starting December 20, 2025) to exercise their options at a price of ₹0.00042 per share.
- Forfeiture: Any options not exercised within this timeframe will lapse and return to the company’s pool.
Unacademy M&A Negotiations and Valuation Reset
The timing of this policy change coincides with reports that Unacademy is in advanced merger and acquisition (M&A) talks with upGrad, founded by Ronnie Screwvala.
According to sources and comments from CEO Gaurav Munjal, the potential deal is being discussed at a valuation of approximately ₹2,650 crore (nearly $300 million)—a staggering 90% drop from its 2021 peak.
Gaurav clarified that the move is an attempt to protect employee interests during a “down-round” acquisition.
“When liquidation preference is properly enforced, ESOPs effectively become zero,” Gaurav explained.
He noted that by converting options into actual equity now, employees might have a better chance of receiving shares in the newly merged entity, even if the current valuation is significantly lower than the capital raised ($800 million+).
The “Tax Trap” for Former Employees
Despite the company’s justification, former employees have voiced frustration on social media, labeling the move as unfair.
The primary challenge is the immediate tax liability. Indian tax laws consider the exercise of ESOPs a “perquisite” or taxable benefit.
Employees must pay taxes on the difference between the current Fair Market Value (FMV) and the exercise price.
They face this cost even though they cannot sell the “illiquid” shares on the open market.
For many, this requires “coughing up” lakhs of rupees in cash for shares that may currently be worth very little, with no guarantee of a future payout.
Unacademy Hiring and Headcount Context
This ESOP tightening follows a turbulent 18 months for Unacademy’s workforce.
The company conducted multiple rounds of layoffs in 2024 and 2025—including a cut of 250 employees in July 2024—as it pivoted toward profitability and offline learning centers.
While Unacademy currently focuses on “sustainable growth,” it maintains conservative hiring plans centered on its language-learning app, AirLearn, and specialized educators for its physical “Unacademy Centres.”
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