The advertising industry witnessed a groundbreaking shift last week as Talented Agency, co-founded by Gautam Reghunath and P.G. Aditiya, unveiled a robust Employee Stock Ownership Plan (ESOP) initiative. The program, which includes a founders’ pool and a minimum guaranteed pay of Rs 8 lakh, marks a significant departure from traditional compensation structures in the advertising sector.
Under the plan, eligible employees will have the option to convert vested equity into its immediate cash value at a 4.5x premium—an offer that industry experts say is virtually unheard of in creative agencies. Speaking to Storyboard18, Reghunath emphasized that Talented’s ESOP buyback initiative is entirely self-funded, with more than half of its full-time employees holding equity or stock options. Notably, over 20% of the company is now employee-owned.
ESOPs, a widely recognized pro-employee initiative, allow businesses to grant shares to their workforce at a subsidized rate, which can then be liquidated after a set period or at a pre-determined valuation. While this model has gained traction in industries such as IT, finance, and retail, it remains a rarity in advertising and creative sectors.
Few agencies have previously experimented with ESOPs. MullenLowe Lintas Group, formerly known as Lintas, was one of the first in India to do so, while J. Walter Thompson (JWT), now part of VML, also implemented a similar initiative, highlighting a commitment to organizational development. However, that’s in the past and the practice has remained largely elusive among creative agencies.
Why has advertising lagged behind?
Experts point to multiple reasons for the advertising industry’s lack of adoption of ESOPs. Saptarshi Das, Vice President at Dentsu India, suggests that many agencies predate the ESOP model, while newer agencies – often spin-offs of legacy firms – simply followed industry norms without challenging the status quo.
“The ad industry has historically been built around creative leadership rather than management expertise,” said Ashish Kaul, a marketing professor. He added that many firms operate with minimal human resources (HR) infrastructure, leading to weaker organizational development compared to industries where ESOPs are more common.
Are ESOPs a fit for advertising?
Even with top-tier management at the helm, ESOPs remain an outlier in advertising. Geetika Gulati, Director at Alakh Advertising & Publicity, believes the industry’s culture may be to blame.
“In advertising, relationships and creativity drive business,” Gulati said. “Stock ownership may not be as attractive to employees as personal growth or creative autonomy.”
The rise of boutique digital agencies has also made ESOP adoption more challenging. Many firms operate with lean teams, a gig-based workforce, and project-based business models. According to Kaul, this fragmentation has prevented the development of strong organizational values and long-term employee incentives.
Can ESOPs solve advertising’s talent retention problem?
The advertising industry has long grappled with high attrition rates. Industry leaders argue that ESOPs could serve as a retention tool by giving employees financial stakes in their company’s success.
“ESOPs create a sense of ownership, making employees more invested in the company’s future,” said Adityan Kayalakal, a founding team member at Veera. He also noted that ESOPs could help mitigate issues such as low pay and long working hours, particularly for junior staff.
At Talented Agency, the commitment to equitable wealth distribution goes beyond ESOPs. Reghunath has introduced a ‘Founders Pool,’ a profit-sharing mechanism that will distribute earnings across the entire team at the end of the fiscal year.
“We’ve structured this to ensure fairness,” he said. “Some junior employees may end up earning more than their senior counterparts based on performance metrics and tenure.”
The Road Ahead
Despite the promise of ESOPs, implementation is not without its challenges. Reghunath acknowledged the complexities surrounding legal, tax, and compliance matters but insisted that the primary obstacle is not regulation, but intent.
“The hardest part of ESOPs isn’t structuring them—it’s committing to them,” he said. “When done right, they align employee and company interests, improving retention and long-term growth.”
Kayalakal cited global agencies such as Ogilvy and JWT as examples where ESOP programs have resulted in lower churn rates among senior executives. Meanwhile, Das pointed out that the rise of data-driven marketing has made competition for talent fiercer, with top IT firms often luring skilled professionals away with attractive ESOP packages.
As the advertising industry becomes increasingly analytical and performance-driven, firms may find that ESOPs are not just a recruitment tool, but a necessity. For agencies willing to embrace the shift, the rewards could be substantial – both for their business and their employees.