E-commerce Unicorn Flipkart has announced a repurchase ESOP’s offer for its employees at a share price ranging from USD 125-129. The offer from the Bengaluru headquartered company comes in the wake of the completion of company’s acquisition by US retailer Walmart for roughly USD 16 billion.
According to one of the sources familiar with the matter, Flipkart will allow employees, present as well as former to liquidate part of their vested options. This will enable current employees to vest up to 50 percent of their stock options now followed by 25 percent in the second and third year. The transaction price would be in the range of USD 125-129 per option.
As far as former employees are concerned, they can vest up to 30 percent of their ESOPs. A company spokesperson also added that the e-commerce firm has always been working in employee interest and continues to stay committed to its goal of employee growth and wealth creation.
- An employee stock ownership plan (ESOP) is a qualified defined-contribution employee benefit (ERISA) plan designed to invest primarily in the stock of the sponsoring employer.
- ESOPs are “qualified” in the sense that the ESOP’s sponsoring company, the selling shareholder and participants receive various tax benefits.
- ESOPs are often used as a corporate finance strategy and are also used to align the interests of a company’s employees with those of the company’s shareholders.
Additionally, Flipkart has completed an ESOP repurchase programme worth over USD 100 million buying back shares from over 3,000 past and present employees of the group last year.
In one of the biggest E-commerce M&A deal that happened recently, Walmart announced buying 77% stakes in Flipkart. Walmart’s investment in Flipkart also includes USD 2 billion of new equity funding that would help the company to accelerate its growth pace amid stiff competition from Amazon which is also actively eyeing on huge investments into its Indian operations.