25,000 in line for Flipkart’s $700 mn Esop cash bonanza
Summary
E-commerce giant prepares to award a whopping $700 million one-time cash payout to holders of employee stock options.
More than 25,000 current and former employees of Flipkart are set to make a financial windfall as the e-commerce giant prepares to award a whopping $700 million one-time cash payout to holders of employee stock options.
Out of the total number eligible for the payout, 14,000, or 70% of Flipkart’s 20,000-strong workforce, are still on the company’s payroll. Former employees holding PhonePe shares will also be eligible for the payout, two people familiar with the development said, without disclosing the number of former employees eligible for the payout.
According to a third person aware of the development, the top 20 employees of Flipkart, including some of the senior management of the firm, will be receiving more than $200 million. The payout to employee stock option holders was triggered by the transfer of Flipkart’s ownership in digital payments unit PhonePe last week to parent Walmart Inc.
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“We are pleased to announce that employees, who are holders of Flipkart ESOPs (employee stock option plans), will receive a one-time discretionary cash payout as part of the transaction. This payout represents the value of the PhonePe holding within those Flipkart options," chief executive Kalyan Krishnamurthy said in an internal mail. VCCircle reviewed a copy of this email sent to employees.
PhonePe’s employees will not be eligible for the payout, one of the people cited above said, requesting anonymity.
The payout will be made at $43.67 per option, taking into account the rise in PhonePe’s valuation, the email said.
“The new share price of Flipkart has been determined at $165.83 per option (previously $189.1), excluding the value of PhonePe. The payout to employees will, however, be at $43.67 per option, reflecting the increase in the market valuation of PhonePe," Krishnamurthy said in the email.
Emailed queries and calls to a Flipkart spokesperson remained unanswered.
Walmart has now become the largest shareholder in PhonePe after acquiring Flipkart’s ownership. The move also made PhonePe a fully India-based company, following the completion of its domicile relocation from Singapore in October.
The separation of PhonePe was announced as the company gears up for its plans to go public once its core businesses turn profitable, which the firm hopes to achieve by 2023.
Fintech unicorn PhonePe is looking to raise as much as $1 billion from General Atlantic and existing investors, including Tiger Global Management, Qatar Investment Authority and Microsoft Corp. at a valuation close to $13 billion, Bloomberg reported earlier this month.
Founded in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer, PhonePe was acquired by the homegrown e-commerce company in April 2016. However, the fintech unicorn was partially spun off from Flipkart in 2020 after PhonePe secured $700 million in a fundraising round led by Walmart.
PhonePe’s consolidated operating revenue more than doubled to ₹1,646 crore during the year ended 31 March 2022. However, its loss widened to ₹2,014 crore from ₹1,728 crore in the previous fiscal.
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