Why your ESOP value is only as fresh as the last valuation report

If your company is listed, you can look up its share price any time. If it isn’t, the best figure you usually have is the fair market value (FMV) from its most recent formal valuation. That number has a date attached, and the date matters.

How intrinsic value is calculated

For each option:

Intrinsic value = fair market value per share − exercise price

Multiply by the number of options. With an FMV of ₹160 and an exercise price of ₹20, each option has an intrinsic value of ₹140. On 434 vested options, that’s ₹60,760.

If the FMV is below the exercise price, the result is negative and the options are described as underwater: exercising would cost more than the shares are currently valued at.

Why the date matters

A valuation measures value on one specific date. If the latest report is dated 31 March 2026, then in November 2026 you’re still looking at a March 2026 value. A lot can change in eight months, in either direction.

That’s why ESOP Record always shows a valuation with its date and source, and never estimates a figure between reports. If no new report has been approved, you keep seeing the last one, with its original date.

Intrinsic value is not cash

Even with a recent valuation, intrinsic value is a snapshot, not money in hand:

• You may not be able to sell. Shares in unlisted companies are hard to sell, and listings often come with lock-in periods.
• Tax comes off the top. Exercising and selling can both be taxed.
• Investor preferences come first in a sale. Many investors hold preference shares that are paid back before common shareholders. A headline acquisition price per share doesn’t automatically equal what each employee share receives.

Using scenarios sensibly

It’s natural to wonder what your options could be worth at a higher price. Scenario tools help, as long as every hypothetical number is labelled as one. In ESOP Record, hypothetical prices are always shown separately from reported valuations, and acquisition scenarios point out where investor preferences could change the result.