Employees of e-commerce major Flipkart will receive payments from a $700 million employee stock option (Esop) buyback today. CEO Kalyan Krishnamurthy informed the eligible employees about the payment in an internal email.
“…the BoD (Board of Directors) had decided to pay US$43.67 (Rs 3,615) as compensation for each Esop (vested options for eligible current and former stakeholders and unvested options only for eligible current stakeholders) as of the record date of December 23, 2022,” the email from Krishnamurthy noted.
The details of individual payments would reach employees by next week, the CEO’s email added. More than 24,000 individuals, including former Flipkart and Myntra employees, are eligible for payments from the buyback. The payment is compensation for the loss of PhonePe’s value in the stock option as a result of its separation, an earlier Flipkart internal note had stated.
“There has certainly been good work across the business, and I want to thank all the teams for their consistent and dedicated efforts in prioritizing impact and value”, Krishnamurthy said in the latest internal email.
ET was the first to report late last week on the buyback payment being made by the end of this month. The payout will be “subject to applicable withholding taxes and other tax rules in respective countries of various Esop holders”, the earlier Flipkart internal note had said about the buyback, adding that legal formalities for the payout were currently underway.
The Flipkart group of firms, which includes fashion portal Myntra, is also offering existing investors and Esop holders the option to reinvest their Esop payouts in the latestPhonePe fundraising round.
The $700 million buyback is the largest for a new-age internet firm in the country.
The buyback is part of a $1.5-2 billion fundraise by PhonePe in a round led by Flipkart and its largest shareholder, US retailing giant Walmart.
Walmart is largely financing the Esop buyback, part of which is through a secondary share sale. In a secondary share sale, new investors pay existing shareholders or employees for their shares — the firm itself does not receive any of the funds.
Flipkart’s own valuation is expected to be readjusted to about $33 billion from $37.6 billion earlier, as PhonePe will have a separate shareholding structure, people in the know of the matter had told ET in November.