Bengaluru: Walmart-owned Flipkart has received board approval to give its current employees the chance to cash out 10% of their vested stock options, according to an email circulated on 29 August by chief executive Kalyan Krishnamurthy.
Employees will be able to sell the options allotted to them at $125-130 apiece, the email said. The value of the options expected to be bought back by Flipkart is estimated to be around $100 million, according to two people familiar with the matter.
“I am excited to announce that the board has approved a one-time discretionary liquidity opportunity, wherein all active employees as on August 18 will have the opportunity to liquidate 10% of their options vested as on that date,” read the email, reviewed by Mint. The latest liquidation event comes just a year after Flipkart employees were able to sell 50% of their vested Esops following the close of the Walmart-Flipkart deal.
The unexpected liquidity event for its employees, experts said, will help Flipkart retain talent. “They (Flipkart) will have to take care of their talent now more than ever before,” said an industry insider, requesting anonymity. “Big value at stake now to protect and grow (after the Walmart acquisition).”
Emailed queries to Flipkart did not elicit a response till press time.
Employee stock options (Esops) are plans under which an employee is given the right to buy shares of the company at a predetermined price. Usually, those who join startups are offered large Esops packages, whose monetary value materializes once the worth of the firm rises and it organizes repurchase programmes. Such programmes tie the growth of the firm with employees’ contribution towards it.
Flipkart’s stock options are usually granted over a four-year period, with employees vesting them every month after a one-year threshold.
After Walmart’s $16 billion purchase of Flipkart last year, current employees were allowed to sell 50% of their vested options at the close of the deal and former employees were given a chance to liquidate 30% of the vested shares. Current employees were told they could liquidate 25% each in the second and third year after the close of the deal. The transaction price was in the range of $125-129 per option.
Prior to this, Flipkart had organized a $100 million Esops repurchase programme in October 2017. The firm repurchased stock options at $85.20, where current employees could sell 25% of their vested options while former employees were asked to limit them to 10%.