Flipkart grants stock worth $100 million to high performing employees: report

“The move is seen as a step by Flipkart to ensure top talent does not leave the organisation”

Flipkart has once again granted its senior and middle-level employees with the company’s stock as part of its annual performance assessment programme. This stock grant, called ESOPs (employee stock ownership plan), has also been done previously, after Walmart took over the e-commerce giant in late 2018. According to a report by The Economic Times, citing people familiar with the matter, this move from Flipkart is to secure its top talent and high-performers from leaving the company said. The total valuation of the grant is believed to be $100 million (roughly Rs 69.8 crores), with shares priced at $125-130 (Rs 8,700-9,000) per unit.

The ESOP grants are different for the select employees, who have been either “promoted or are high performers.” The stock options doled out to employees range from equivalent of six months of salary to a full year’s remuneration. This comes after the company gave ESOPs in November, though that was largely limited to the top management.

Employees granted the stock will be able to cash in on 25 percent of their new prize by the end of the first year, and each month thereafter for three years. The stock disbursement is nothing new for Flipkart as the company said it has been a culture to reward ownership. Walmart last year purchased $800 million (Rs 5,581 crores) worth of shares from the Flipkart ESOP reserve making many employees millionaires in the process.

“There are also talks of an IPO for Flipkart being planned for 2021, which gives them a possible liquidity event to look forward to besides a share buyback by the parent company, which may come through in the future,” said one of the sources cited in the report.

Flipkart has been under increasing pressure from well-funded startups like Swiggy and OYO, which can poach their top talent – this stock issuance is seen as a move to insulate the company from such moves. There’s also the threat of a direct competitor in the shape of Reliance Industries Limited, which is strongly reported to be foraying into the e-commerce segment by late 2019. Flipkart’s total ESOP pool was about $1.5 billion, but around half of it was bought by Walmart when it bought a 77 percent majority stake in the company.

from 91mobiles.com http://bit.ly/308s20x
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