Drama at Silverstone: Was Lewis Hamilton guilty of ending Max Verstappen’s race?
Sports
On Sunday, Formula 1 saw one of the worst accidents in its history. The accident involved championship leader, Max Verstappen (Team Red Bull) and seven-time world champion Lewis Hamilton (Team Mercedes). While Max was knocked off the race and into the hospital, Hamilton went on to win the race.
The incident happened in the first lap of the British Grand Prix at the Silverstone Racing Circuit when the left front wheel of Hamilton’s Mercedes brushed up against Verstappen’s Red Bull on a high-speed turn sending the latter into the barricades, knocking him out of the race while Hamilton went on to win the Grand Prix.
Hamilton started the race aggressively, putting pressure on Verstappen from the minute go. But Verstappen defended valiantly with both the drivers producing one of the best first laps the game has ever seen. However, on turn 9, Hamilton went to the inner side of Verstappen’s Red Bull looking to overtake him, when the front left wheel of the Mercedes touched the Red Bull on the right side sending Verstappen crashing into the barriers.
The aftermath: Max to the hospital and advantage to Hamilton
The crash happened at such a high speed (~280 kmph) that it totaled Verstappen’s car. After the crash, Max looked flustered and had to be taken to the hospital, where, fortunately, he was declared safe. Meanwhile Hamilton, despite taking some minor damage to his car, went on. Later the stewards upon discussion decided to give Hamilton a 10-second penalty which he had to undergo in the pit lanes before changing his tyres.
The controversy: Team Red Bull blames Hamilton for the crash
After the race, Red Bull team principal Christian Horner told the race director "Full blame lies on Hamilton who should never have been in that position," dubbing the crash as a “Professional Foul” by Hamilton. ‘
On the contrary, Hamilton maintains that he had left Verstappen with enough space to avoid the contact. Adding to Red Bull’s frustration, Hamilton went to win the race despite the penalty levied on him, leaving the point gap between him and Verstappen to only eight.
The penalty
The penalty from stewards was a clear indication that the officials at FIA considered Hamilton to be responsible for the crash as well. According to the stewards, Hamilton, despite having the racing line, had a lot of space to his right and could have done more to avoid the crash. Formula 1 has always been in a pickle about deciding the justified penalty for such incidents and to some the 10-second penalty was unfair for Red Bull, as the championship is now wide open once again.
Celebrations
Hamilton’s celebration after the race has drawn a lot of flak from Team Red Bull and its fans. Verstappen had this to say after the race, "Watching the celebrations while still in hospital is disrespectful and unsportsmanlike behaviour but we move on.”
Hamilton on the other hand seems unapologetic about his part in the incident and has stated that this incident does not take away anything from his eighth victory at Silverstone and that he won't be bullied into being less aggressive.
The blame game: What do the neutrals have to say!
For the neutrals, the crash is more of a regulation driving incident and the aggressive driving style of both the drivers is to blame. Ferrari’s Charles Leclerc, who was running 3rd at the time believes that it is difficult to blame either of the drivers.
Mclaren boss Zac Brown said that with the rivalry between Verstappen and Hamilton taking shape, these kinds of incidents are bound to happen and the drivers could have been part of similar collisions on multiple occasions earlier in the season as well.
Author’s opinion
After an era of dominance from Mercedes and Lewis Hamilton, the 2021 season has seen the silver arrows chasing their own tails as Red Bull has comprehensively been the better car. With every race and every point being vital, a crash between the contenders is bound to be perceived contrastingly by both the teams and create a lot of controversies. Moreover, Formula 1 and crashes are synonymous and the greatest rivalries are built on them be it Prost-Senna or Lauda-Hunt.
Understanding ESOP - All your FAQs answered!
Finance
A few years back, there was a stark difference in the wealth that a strategy consultant could create compared to your average software developer or product manager in the IT space. However, things are beginning to change and ESOPs are leading the change.
For instance, a senior from my MBA college joined Udaan as a PM and got 20L worth of ESOPs. At that time, Udaan was valued at $200Mn. Suddenly, Udaan raised their next round within two months of his joining (and became India’s fastest unicorn in September 2018) and his 20L worth of ESOPs were worth INR 1 Cr! So, what are ESOPs really? How can you get them? Let’s find out!
What are ESOPs anyway?
ESOPs or Employee Stock Options Plan is a way to incentivize employees with an ownership interest in the company. Consider this; you’re working for a company valued at INR 1 Cr. The company promises you that you’ll get ‘x’ stock options worth INR 1 lakh if you work for a year.
Now, if the company does really well and its valuation increases(by raising another round of funding or the share price in the open market), the value of each stock increases. Say the company is now worth INR 2 Cr after raising a Series A round. It means that your stocks are now worth INR 2 lakh. Basically, you have a component in your CTC that is closely tied with the overall company’s performance.
Why do companies give ESOPs?
Retention: ESOPs are generally paid out in a staggered manner. For instance, according to our survey, an average Program Manager at Amazon is generally offered 15 to 20 lakhs worth of ESOPs, which are vested in a staggered manner, i.e., 5% in year 1, 15% in year 2, 30% in year 3 and 50% in year 4. Hence, it’d act like an incentive and a hook for an employee to see through those four years.
Inflate CTC: ESOPs are included as a part of the CTC. For instance, if company X has a base pay of INR 10 lakhs and plans to give ESOPs worth INR 10 lakhs over four years, they still show their CTC as INR 20 lakhs.
Apart from this, motivation and creating a culture of ownership are also reasons to introduce ESOPs in the structure.
FAQs
There are too many complications and confusion around ESOPs. Let’s look at a few of the FAQs.
Q1. If ESOPs worth 5 lakh get vested, can I get that money from the company immediately?
A. It depends. For companies that have done an IPO or get acquired, you can immediately get money for the shares allotted to you. However, for companies that are not listed on an exchange, you have to wait for a buy-back* from a company to get your money. Basically, when a company raises a round of funding, it may buy a few(or all) of the vested stocks from the employees in exchange for money.
This entirely depends on the company. Recently, this has become a trend with companies like Meesho, CRED doing many buybacks from the employees.
*Buy-back: When a company raises a round of funding, it may buy a few (or all) of the vested stocks from the employees in exchange for money.
Q2. If I leave the company, what happens to my ESOPs?
A. If you leave the company midway, you remain as the owner of the ESOPs that were vested. For instance, in the example of Amazon above, if you leave in 1.5 years - you will get 5% of ESOPs even after leaving the company. In most cases, you’re not obliged to sell those shares immediately.
Q:3
. What are RSUs?
A. RSUs or Restricted stock Units are the shares of a company that is not fully transferable(or vested) until certain conditions have been met. Basically, ESOPs are a form of RSUs.
Q4. If a company gives me two offers: One with a high base and low ESOPs and the second with a low base and high ESOPs, which should I select?
A. Well, this depends on your risk-taking ability and belief in the company. If you’re looking for some immediate case in the short term, you should go the high-base, low-ESOPs route. However, if you’re financially sorted and believe that a company will do really well, you can go for the high ESOPs route. In start-ups, the value of your ESOP can scale exponentially very soon, as we saw in the Udaan example.
ESOPs can make you very rich. However, one must be wary of the risks associated with ESOPs. The value of ESOPs will amount to nothing if they don’t actually go through some sort of a liquidation event like IPO, merger/acquisition, or a buyback. Often, the value of a company might drop and hence, your ESOPs might not amount to anything substantial. For instance, in the case of Snapdeal, the employees holding the shares might not have made a great deal out of it.
ESOP Dictionary
Grant Date –The date of the agreement between the employer and employee to give an option to own shares (at a later date).
Vesting Date – The date the employee is entitled to buy shares after conditions agreed upon earlier are fulfilled. This date is also the agreed-on grant date.
Vesting Period – The time period between the grant date and vesting date.
Exercise Period – Once stocks have ‘vested,’ the employee now has a right to buy (but not an obligation) the shares for a period of time. This period is called the exercise period.
Exercise Date – The date on which an employee exercises the option.
Exercise Price – The price at which an employee exercises the option. This price is usually lower than the prevailing FMV (fair market value) of the stock.
Like what you read? Share this article with your friends and follow us on:
Instagram | Medium | LinkedIn