The stock award is unrelated to Mathrubootham’s salary, which totalled $611,980 last year. This is because the 9 million stock units include 6 million in performance-related restricted stock units, or PRSUs, and 3 million RSUs that will vest over four years, according to a disclosure made by the company.

Freshworks’ reward to its CEO comes at a time its equity-based pay costs totalled $173.4 million, or about 47% of its $371 million revenue last year, making it one of the highest among all companies globally.

For Mathrubootham to receive 100% of the award, the stock price would need to average at least $200 for two months before January 2029. In the worst case, if the company falls short of these targets or if the CEO leaves the company, Mathrubootham is assured of a third or, 2 million, of these PRSUS.

The San Bruno, California-based company gave the CEO $11.78 million of RSUs in 2020.

“(I)n recognition of Mr. Mathrubootham’s instrumental role in achieving our strategic and business goals to date and, more importantly, the significant potential impact of his role on an ongoing basis, our board of directors approved the grant of two restricted stock unit awards under the 2011 Plan to Mr. Mathrubootham, including (1) a restricted stock unit award in respect of up to 6,000,000 shares that is subject to both a continued service requirement and various stock price hurdle requirements (the “PRSU award”) and (2) a restricted stock unit award in respect of 3,000,000 shares that will vest over four years,” said the company in its filing.

An email sent to Freshworks seeking comment went unanswered.

Freshworks’s revenue totalled $371 million in 2021, a 48.6% rise from $249.6 million in the previous year. Last year, the company’s net loss widened to $192 million from $57.3 million in 2020.

“Over 40% of revenue in share-based costs is too high and disproportionate,” said V. Balakrishnan, a former chief financial officer of Infosys Ltd and founder of Exfinity Ventures, a venture capital fund.

Over the past few years, startups have used RSUs to reward executives. Under this mechanism, shares are given to employees at a pre-decided price and paid out to employees over time.

At PB Fintech Ltd, the parent of insurance aggregator PolicyBazaar and credit marketplace PaisaBazaar, share-based expenses were 39% of the company’s ₹1,550.3 crore revenue in the year to March, according to an analysis by Mint. At Zomato, equity-based pay costs accounted for 19% of the food delivery firm’s ₹4,687.3 crore revenue, while it totalled 16% of ₹4,974.2 crore revenue at One97 Communications Ltd, which runs Paytm.

A higher share of equity-based expense at the three loss-making firms contrasts with Nykaa’s corporate parent, FSN E-Commerce Ventures, where share-based expenses were 0.4% of ₹3,800 crore revenue.

Earlier this month, Freshworks shares touched a low of $12.91, which is lower than the $14.47 average price at which employees were given 47,380 RSUs, and which have remained unvested as of 31 December.

Freshworks shares traded at $16.09 a share on Nasdaq on 27 May, giving it a market cap of $4.6 billion, down more than a third from the $13.4 billion valuation when its shares were listed.

“When the markets are buoyant, employees settle for more options. But it will be reversed when the market is downhill,” Balakrishnan said.

When a company’s stock declines, Balakrishnan said, the firm has to offer an employee more stock, leading to further dilution of share capital and lower return for shareholders.

About 87%, or 4,000 of the 4,600 Freshworks’ employees, are based out of India.

Eighty-five per cent of Freshworks is owned by the five largest shareholders, including Mathrubootham, who owns 8.1% of the company he co-founded in 2010. Accel Partners, the Silicon Valley venture capital firm, is the largest shareholder, with a 33% stake at the end of December 2021. Capital Group, one of the world’s biggest fund managers with $2.7 trillion of assets under management, owned 19.11%, while American hedge fund, Tiger Global, owned 15.97%. California-based VC giant, Sequoia owned 8.71%.