Back in May, during a Flipkart all-hands meeting, a big cheer had rung across as co-founder and Group CEO Binny Bansal announced a 100% buyback of vested employee stock options (ESOPs) on the heels of the $16 billion deal with Walmart. With as many as 3,000 employees out of its 10,000-employees workforce still holding shares in Flipkart, plenty of people were suddenly on their way to becoming dollar millionaires.
Though the final contours of the deal on offer is not as attractive as the media speculated, employees holding stock options are nonetheless in for a windfall. According to The Economic Times, Flipkart has announced in a letter to current employees that they will be allowed to liquidate their ESOPs at $126-128 a unit - against $150 a unit as the reports had initially suggested - depending on the charges applicable. For the record, ESOPs are a type of employee benefit plan that encourages employees to acquire stocks or ownership in the company.
Walmart's recent filing with the US Securities and Exchange Commission reveals that it is obligated to purchase 6,242,271 shares from Flipkart's ESOP pool of 11,947,026 shares, or over 52%. Based on the per-share purchase price, the worth of Flipkart's total ESOP is about $1.5 billion. So, in effect, the world's largest retailer will purchase ESOPs worth $800 million from Flipkart's employees.
The daily added that 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.
The list of employees who are going to now hit pay dirt reportedly includes Ananth Narayan, CEO of Myntra and Jabong; Mekin Maheshwari, former HR Head; Sameer Nigam, founder and CEO of PhonePe, the payment arm of Flipkart; and Ambur Iyyapa, the first employee of Flipkart, who had joined as a logistics manager and climbed the totem pole to Associate Director, Customer Experience Management.
"The ESOP repurchase programme, a yardstick for the industry, is part of our continuing efforts to thank and reward our employees for their service," a Flipkart spokesperson told the daily. Just nine months back, Flipkart had bought back ESOPs worth over $100 million.