Flipkart disburses $100 million in ESOP repurchase programme    

E-commerce leader Flipkart today announced that it has completed its Employee Stock Options (ESOP) repurchase programme by disbursing over $100 million to over 3000 past and present employees of The Flipkart Group in a buyback offer.

Initiated in October, the programme gave all eligible current and former employees of Flipkart, and group companies Myntra, Jabong, and PhonePe, an opportunity to sell to the company a part of their vested ESOP units.

Flipkart claims that the repurchase programme is the single largest liquidity providing event in India by an unlisted, private company to its ESOP holders. This is the fourth instance in the past five years when Flipkart has given its ESOP holders an opportunity to encash a percentage of their vested stock options.

In a press release, Sachin Bansal, Chairman of Flipkart, and Binny Bansal, Group CEO, have said, “Employees are our biggest source of strength, without whom Flipkart couldn’t have built the e-commerce industry in India. As an organisation, we believe they should be equal partners in Flipkart’s success.

This ESOP repurchase programme is an extension of that culture, and a token of thanks for the dedication and hard work they have put in over the years. We’re delighted to be setting the benchmark on this important parameter, not only in the startup industry but the wider Indian private sector as well.”

Flipkart was valued at $15.2 billion in July 2015. Immediately after raising $1.4 billion investment from Tencent, eBay, and Microsoft at a valuation of $11.6 billion in April, Flipkart had announced that it would issue “differential stock options to all eligible employees” in an effort to protect employees from a drop in the share price. They have now been given stock options at the current valuation – at lower prices to compensate for that.

Usually, the company’s valuation is translated into its stock price. For instance, if a Flipkart employee gets 100 stocks at $100 each, she has $10,000 worth of stock options. If in four years, Flipkart’s valuation increases to $20 billion from $11.6 billion, then employees’ stock options will double too – instead of $10,000, she will get around $20,000.