The employees of B2B e-commerce platform Udaan will now be able to tender their shares every quarter instead of every year, as the company has decided to remove the cliff vesting for all Employee Stock Ownership Plan (ESOP). Cliff vesting refers to the period after which an employee becomes fully vested.
The one year cliff period is a widely prevalent industry practice that requires employees to wait for one year for their ESOPs to start vesting.
Meenakshi Priyam, Group CHRO at Udaan, said, “People trust companies with their careers. We felt that the practice of granting ESOPs with a one-year cliff doesn’t reciprocate this trust. As a progressive employer, we have decided to take the lead in balancing the scales in employer-employee relationships in the industry and revamped our ESOP policy.”
As a part of the revamp, the company also announced that, every employee at Udaan, regardless of their tenure or job profile will be allotted ESOPs under their Annual Performance cycle. Further, these ESOPs will vest at a quarterly frequency and be completely vested within a two-year period as compared to the usual industry norm of four years.
Following these changes, the overall number of ESOP holders in the company has grown by 400 percent and now covers its complete employee base.
“Our annual ESOP programme creates a pathway for each and every employee to earn ownership in the company through their contributions & commitment. We have seen ownership and leadership being displayed by our people in every part and at every level of the organization,” said Priyam.
For years, ESOPs have been a rare source of wealth creation at startups due to lack of exits, but over the last year and a half, many firms have announced buybacks and also expanded the ESOP pool to cover more stakeholders, a move aimed at motivating employees and retaining them.
This announcement comes a little over a month after Udaan raised $250 million through convertible notes and debt funding to further grow and capitalize on the growth opportunity that the Indian eCommerce market offers.
Udaan last raised equity funding in January 2020, when it was valued at $3.1 billion. Its investors include DST Global, Lightspeed Venture Partners and GGV Capital, among others.
The company said that it has invested more than Rs 4,000 crores in the past 12-18 months across different pillars of business - people, technology, supply chain, category, credit, compliance - to accelerate and strengthen capabilities.
Udaan has over 3 million registered users and around 30,000 sellers across the. The platform has over 3 million kirana shops, retailers, chemists, HoReCa, farmers, etc. doing over 5 million transactions per month. The company also operates a logistics network with over 200 warehouses spread and plans to scale its warehouse capacity to 50 million square feet from 10 million square feet currently in the coming seven to eight years.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
