BENGALURU: Flipkart is buying back employee stock options (ESOPs) worth Rs 600 crore ($80.5 million), a move that will create new dollar millionaires. Around 6,000 Flipkart employees are learnt to have the option to liquidate up to 10% of their vested ESOPs.
The ESOP buyback is part of the latest $3.6 billion funding round led by a clutch of investors, including GIC, Canada Pension Plan Investment Board, SoftBank Vision Fund 2 and Walmart.
In an e-mail to employees, Flipkart Group CEO Kalyan Krishnamurthy said, "... it has always been our endeavour to provide our employees with an opportunity to liquidate their vested options regularly. This year, we are pleased to announce a buyback of 5% of the past three years' vested options. With this landmark event for us, I am happy to share that we are offering our employees an additional buyback of 5% of all vested options as we stay committed to wealth creation for you."
The weighted average fair value of the options granted during the 2019-20 financial year was $106.9, compared to $111 in the year before, regulatory documents sourced through businss information platform Tofler showed. In 2019-20, Flipkart India repurchased 48,897 employee stock options, compared to 187,974 in the year before. It granted 204,940 options during 2019-20, compared to 294,187 in the year before.
In 2018, when Walmart acquired Flipkart, it had reserved $500 million to buy back ESOPs from Flipkart’s staffers. The buyback had turned a few hundred Flipkart employees into dollar millionaires. Flipkart employs over 15,000 full-time employees in India.
Many new-age companies, including Swiggy, Zerodha and Razorpay, have been buying back employee ESOPs. ESOPs are a widely-used retention tool.
