Snapdeal, India's third largest online portalSnapdeal

Online retailer Snapdeal has given stock options to 1,200 employees to recognize their contribution to its success and retain them, as talent becomes increasingly crucial to the success of companies in the e-commerce sector, which is growing at a fast pace in India. 

Further, the company has amended the vesting period for stock options from annual to quarterly basis in order to motivate employees.

The e-tailer has raised the share of equity allocated for distribution of options to 10 percent from 6 percent to enable the recent round of employee stock options (ESOPs).

"Only the top performers at Snapdeal have got stock options over and above the salary increments," Saurabh Nigam, vice-president (HR), Snapdeal, told The Economic Times.

The 1,200 employees constitute about a third of its total headcount of of 4,000. In the previous year, the company awarded stock options to 300 out of a total 1,200 employees.

"We clearly want to share our success and recognise their role in the company's journey," he said.

Other Internet startups such as Flipkart, Pepperfry and UrbanLadder are also giving out stock options to employees as part of their talent retention strategy. 

The startups are also rewarding their employees with cash prizes and gifts. Companies such as Ibibo , Pepperfry, HolidayIQ and FabFurnish have even reduced the performance appraisal cycle to quarterly or half yearly basis, instead of annual.

According to a report by Morgan Stanley, Flipkart accounted for 44% share of India's e-commerce market, followed by Delhi-based rival Snapdeal at 32%. Amazon, launched in India in 2013, ranked third with just 15%, Business Standard reported.

Snapdeal, which received $627 million in funding from Japan's SoftBank Group in November last year, is expected to make acquisitions worth $1 billion this year.