Walmart is going to launch a buyback of Flipkart ESOPs (Employee Stock Options) worth $800 Million.
ESOPs, or Employee Stock Options, have become a routine way of keeping early stage employees and top talent happy within the startup ecosystem. Flipkart, SnapDeal, PayTM, and almost every other major consumer-facing eCommerce platform in India engages in the practice of distributing ESOPs to retain high-performing talent.
Most notably, in a recent move, PayTM founder Vijay Shekhar Sharma diluted 5 % of his ownership in PayTM Mall to provide an additional $50 million in ESOPs.
Flipkart has issued ESOPs worth $1.5 billion so far, based on their per-share purchase price. And as part of the recent Walmart-Flipkart acquisition deal, all Flipkart employees can liquidate their ESOPs at a value of $126-128 per unit.
Under the terms of the acquisition deal, Walmart must buy back 6,242,271 shares from Flipkart’s total ESOP pool of 11,947,026 units, amounting to a total of $800 million.
Previously, Flipkart had announced that it would buyback up to 30% of all vested ESOPs from its former employees, at a price ranging between $125 to $129 per share. The new plan however outlines, that all former employees will have to wait for Flipkart to go public before they can monetize their vested ESOPs.
The new deal, which is only open to current employees at Flipkart, allows them to:
- Liquidate (sell) up to 50% of their toal vested ESOPs immediately after the deal closes
- Liquidate a further 25% at the end of a year after the first liquidation
- Liquidate the remaining 25% after two years of the first liquidation
Do you know a friend who works at Flipkart and is about to get rich? Tag them in this post and share it with them! It's time to ask for a treat, apparently.
ESOPs (Wikipedia) - https://en.wikipedia.org/wiki/Employee_stock_option ↩︎