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New Delhi: A flashy cost-to-company (CTC) number may look impressive, but it often hides how much money an employee will actually take home. This gap between promise and reality was recently highlighted by Sahil Thakur, founder of BlockseBlock, in a LinkedIn post that struck a chord with young professionals.
Thakur shared the experience of one of his students who received a job offer from a startup quoting a salary of Rs 18 lakh per annum (LPA). At first glance, the figure appeared unusually high for a fresher. But a closer look at the salary structure told a very different story.
According to Thakur, only Rs 6 LPA of the offer was a fixed base salary. The remaining Rs 12 LPA was spread across bonuses and equity that were dependent on multiple conditions and timelines, making them uncertain rather than assured income.
A significant portion of the package, Rs 4 LPA, was tied to a performance bonus. This bonus would be paid only if the employee achieved 120% of their targets. As Thakur pointed out, “The catch is that targets are set by the manager and structured so that only around 10 per cent of people actually meet them.”
Another Rs 3 LPA was classified as a retention bonus, payable only if the employee stayed with the company for two years. Thakur noted that this condition alone made the payout unlikely, adding, “Most people quit within 18 months.”
The remaining Rs 5 LPA came in the form of Employee Stock Options (ESOPs). These options were calculated based on the startup’s current valuation and were set to vest over four years. However, their real value would exist only if the company eventually went public or was acquired. Without such an event, the ESOPs could effectively be worthless.
Breaking down the numbers, Thakur concluded, “So what the candidate really gets is Rs 50,000 per month. That’s Rs 6 LPA. Not Rs 18 LPA.” He summed up the structure bluntly, saying the offer guaranteed Rs 6 LPA, while the remaining Rs 12 LPA was “imaginary.”
Thakur criticised companies for inflating CTC figures using hard-to-achieve bonuses and speculative equity. “Rs 18 LPA looks far better than Rs 6 LPA. Most freshers don’t ask for a detailed breakup - they just see the big number and say yes,” he wrote. His advice to the student was equally stark: “You’re not making Rs 18 LPA. You’re making Rs 6 LPA with a lottery ticket.”
The post triggered widespread discussion online, with several professionals sharing similar experiences. One user recalled, “The ESOPs remind me of my old company where the founder promised ESOP to every cofounding team member, including me, but we never got it.” Another added, “Forget about freshers, there is a decent % of laterals who don’t know their CTC breakup.”
