All lively staff as of July 5 can liquidate as much as 5% of their excellent choices vested since July 6, 2022, Flipkart group chief government Kalyan Krishnamurthy wrote in a be aware to staff. The buyback value is about at $174.32 per possibility, with funds anticipated in August 2025.
The corporate has been a serious wealth creator amongst its friends in India’s web economic system, with a number of worker inventory possibility plan (Esop) buybacks aggregating to $1.5 billion throughout varied tranches up to now six to seven years.
2018: When the corporate was acquired by Walmart in 2018, Flipkart undertook a $500 million buyback as a part of the deal. It was just for present staff, nonetheless, who might promote their vested inventory choices. It was accomplished over three to 4 years.
2019: Flipkart disbursed a recent set of Esops to its senior and middle-level workers in an try and retain key expertise after Walmart took over the reins. The Esop distribution was a part of the corporate’s annual efficiency evaluation programme.
2021: The Bengaluru-based etailer bought $80-85 million value of shares from staff as a part of its $3.6 billion financing spherical. This was prolonged to solely present staff.
2023: Flipkart’s final main Esop buyback was in 2023, when it purchased again inventory choices value $700 million from present and former staff after the PhonePe cut up. Greater than 24,000 people, together with former Flipkart and Myntra staff, have been eligible for funds from the buyback.
That was the biggest Esop buyback by an web agency in India, topping the $500 million supplied by Flipkart when Walmart acquired it in 2018.
Why do corporations provide Esops?
Corporations provide Esops for varied causes, together with:
Offering liquidity to staff with out launching an IPO: Esop is an important device that gives liquidity to staff with out the corporate having to go public. Eligible workers can offload a portion of their vested shares again to the corporate, providing them monetary returns with out the corporate needing to take the IPO route.
Expertise retention: Esops are monetary recognition that helps retain staff and preserve them motivated. Some corporations additionally mix buybacks with re-grants of choices to take care of incentives.
Reallocation of shares: Esop buybacks unlock shares granted to staff, enabling corporations to reissue them to new or present staff.
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