Flipkart employees may gain USD 500 million when the company allows them to liquidate their employee stock options (ESOPs) after the Walmart deal, a source told Moneycontrol.
The deal that valued Flipkart at USD 20.8 billion was of the biggest deals in the e-commerce space, and created a pool of wealth for its employees.
"Everyone is eagerly anticipating buyback of vested ESOPs. There are over 2,000 employees, as far as I know, who own ESOPs across Flipkart, Myntra and Jabong. There are some former employees also who own ESOPs," a senior employee in Flipkart's marketing team said.
Flipkart's headcount stands at about 10,000 employees.
According to sources, about 200-250 employees of Flipkart, 150 of Myntra and additional 50 of Jabong are eligible to exercise the option as part of the deal.
"Many of us were concerned about the stocks we held after valuation of the company was downgraded a couple of times. We were compensated for it with additional shares, but we still thought the stock options are going to be a waste," said an existing employee of the company with the branding team.
"The latest deal is path-breaking and we are reading that some of the senior members are going to be millionaires. We expect to gain, too. We haven't been given any formal notification for it, but I think on Friday the management will make it clear," he said.
According to an employee, Flipkart co-founder and group CEO Binny Bansal has indicated that the company will buy back 100 percent of the vested ESOPs.
Even though there has been no formal announcement, the employees of Flipkart are optimistic. Ideally, in such circumstances, when majority of the company's stake is acquired and if it's not a stressed deal then employees get an opportunity to liquidate their stock options.
Flipkart had bought back about USD 100 million worth ESOPs at USD 85.2 per unit after the deal with SoftBank last year under which latter invest USD 2.5 billion in the e-tailer. It was the fourth instance in the past five years when Flipkart gave its ESOP holders an opportunity to encash a part of their vested options.
A former employee of Flipkart indicated that the current buy back of ESOPs could be in the range of USD 100-150 per unit, considering the valuation of the company shot up to about USD 21 billion after the Walmart deal.
Flipkart’s stock option offerings last for a period of over four years, and employees are allowed to sell these off after a one-year lock-in period.
In January, SoftBank-backed Paytm said some existing and former employees sold part of their shares to new investors including undisclosed family offices and a few western funds in a secondary sale.The round saw about 200 employees of the company liquidating their vested ESOPs for Rs 300 crore.