Big Billion Day for 19,000 current & former Flipkart employees; company begins crediting $700 mn in ESOP payouts

Kalyan Krishnamurthy Flipkart CEO

In what is an instance of wealth creation at a new-age company, Flipkart will be paying out a total of $700 million to 19,000 employees beginning today, people in the know told Moneycontrol.

Moneycontrol had earlier reported that Flipkart will buy back employee stock options (ESOPs) worth about $700 million from employees as a part of its move to separate full ownership of payments and financial services unicorn PhonePe, as the e-commerce giant looks to hire and retain talent at a time when most startups in the country are undertaking layoffs due to the ongoing funding winter.

Several former employees, who have moved on from Flipkart, and others have already received their payouts earlier today, people aware of the developments told Moneycontrol. The company valued each share at around $43, they added.

The company plans to prioritise and reward employees who have spent longer at Flipkart, and not necessarily the senior management, and the entire $700 million is likely to be disbursed within this month itself, Moneycontrol has learnt.

"...I am delighted to inform you that the much-awaited compensation will be made today, July 14, 2023. You will receive the details of your individual payout by the following week, and I thank the team that has worked diligently and tirelessly to bring this endeavor to fruition,” Kalyan Krishnamurthy, CEO of Flipkart, told employees in an internal mail earlier today. Moneycontrol reviewed a copy of the mail.

"I want to thank all the teams for their consistent and dedicated efforts in prioritizing impact and value. It is your commitment to our Purpose that continues to drive success for Flipkart," it added.

Last month Walmart, the US-based retailer which operates Flipkart and PhonePe, said the marketplace and the fintech decacorn, could each be $100 billion businesses buoyed by strong growth.

"We have exciting times ahead, and as we continue to grow across businesses, I look forward to your continued dedication and determination to bring about the future that we envision and scale new heights together," Krishnamurthy's email added.

The Board of Directors (BoD) of Flipkart Private Limited had announced the complete separation of the PhonePe business by selling off their entire shareholding in December 2022.

"...the BoD had decided to pay $43.67 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 read.