Flipkart employees are set to gain from their stock options weeks after Walmart completed its $16-Bn investment in the ecommerce firm.
In a letter to current employees, Flipkart announced that they will be allowed to liquidate their employee stock ownership plans (ESOPs) at $126-128 a unit, depending on the charges applicable.
Walmart is obligated to purchase 6,242,271 shares from Flipkart’s ESOP pool of 11,947,026 shares, according to a recent filing by the global retail giant with the US Securities and Exchange Commission. In effect, Walmart will purchase from Flipkart employees ESOPs worth nearly $800 Mn. The total worth of Flipkart’s ESOP is about $1.5 Bn based on the per-share purchase price.
A spokesperson for Flipkart said in an emailed statement, “The ESOP repurchase programme, a yardstick for the industry, is part of our continuing efforts to thank and reward our employees for their service.”
The employees have received emails asking them to tender a part of their shares under the employee stock option plan. The share buyback programme is expected to be completed by the end of this month.
However, employees currently working with the online retailer will be allowed to liquidate 50% of their vested ESOPs following the close of the Walmart-Flipkart transaction, another 25% at the end of one year following the first liquidation, and the remaining 25% at the end of two years following the first liquidation.
In December 2017, the Bengaluru based company had completed its fourth ESOP repurchase plan worth $100 million, the largest such buyback by a private company in the country. More than 3,000 employees of Flipkart and its fashion arms Myntra and Jabong, and its payments arm PhonePe had participated in that repurchase exercise.
Many Indian startups have been using ESOPs to acquire and retain talent. Recently, cab aggregator Ola also allowed ESOP encashment worth at least $30 Mn from former and early employees after Temasek acquired shares in the company.