New Delhi, June 3 -- My company offered me employee stock option plan or Esops in lieu of part of my cash salary, early in my career. With a home loan to service, I chose the cash. Those forgone Esops would have been worth 320 times the value.

That experience illustrates why the question most professionals ask-should one accept a lower salary in exchange for Esops?-is the wrong question. It treats the decision like a coin toss. It is not.

There is a popular view that Esops are lottery tickets and you should ascribe them zero value when negotiating. That view gets one thing right: most people do treat Esops like lottery tickets. But that is usually because they refuse to do the math.

The value of any Esop grant is the product of three t...