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One of the fastest growing ecommerce website of India, Flipkart has decided to come up with a $100 Million ESOP repurchase plan to benefit 6000 current and former employees of Flipkart, Myntra and Phone Pe. The current purchase plan is considered to be one of the largest programmes so far by any company in the Startup Sector for its employees.
Flipkart has recently been able to claim a sum of $4 Bn from Softbank, Microsoft and Tencent China. With $ 4 billion in cash, the company has been the first of its kind to have launched a scheme to benefit employees who have contributed in action, in the development of the company, in the past. This shall be considered to be one of the inflexion point for others to look at employee benefits and perks, as relevant as Flipkart’s initiative. With Flipkart employees able to get liquidity opportunity through the ESOP repurchase plan, more startups will be encouraged to look at such opportunities in the days to come.
Flipkart ESOP Repurchase Plan offers $85.2 per unit
Flipkart has decided the repurchase of stock options at $85.2 (INR 5,561) per unit. Apart from this each transaction will also carry a fee of $3-$4. As per the buy back plan the existing employees of Flipkart will only be able to sell 25% of their vested shares while former employees will be allowed to sell 10% of their stakes.
Flipkart Group CEO Binny Bansal stated in an email to employees, “Flipkart is among the few companies that have given this opportunity, not once but four times in the past five years. It’s only because as an organisation, Flipkart’s culture is steeped in transparency and fairness – the first step of which is to ensure employees are rewarded for their dedication and hard work. Without you, Flipkart couldn’t have become the flagbearer of Indian e-commerce.”
A brief history of some ESOP benefit scheme for some of the leading Startups of India.
Paytm – In the past around 47 employees of Paytm have reportedly sold company shares worth INR 100 Cr to company’s external Board members like former Google and Uber executive Amit Singhal, WhatsApp’s Neeraj Arora, and Ruchi Sanghvi. This was reported when the founder of Paytm Vijay Shekhar Sharma’s name surfaced in the 6th “Hurun India Rich List 2017” – a list of the richest people in India with a Net Asset Worth pegged at $153 Mn (INR 1,000 Cr).
Citrus Pay – Citrus Pay had been acquired by its bigger rival PayU for $130 Mn (INR 850 Cr) witnessed around 50 employees selling their stock options at the time of acquisition. Out of the total sum of around 47 employees, 15 employees earned more than $150K (INR 1 Cr). This included an office boy who was one of the early employees in the company. As per the report the office boy walked with a sum of $75K (INR 50 Lakhs) in total against his ESOPS in the company.
Apart from these couple of Startups, Startup companies like Ola, InMobi, InfoEdge, MakeMyTrip also had similar incidents of employees selling their shares pre-IPO to earn in crores. This definitely is going to be a great booster for great talents to get associated with Startups in the near future.