Snapdeal founders pledge $30 mn of payout for staff

In a first for an e-commerce company, Kunal Bahl and Rohit Bansal, co-founders of online marketplace Snapdeal, are planning to give $30 million, roughly Rs 193 crore, to the existing and some former employees from their own payout once the company’s sale to Flipkart is through.
 
According to sources, the 1,200-odd employees left at Snapdeal will get from the co-founders half the $60 million payout SoftBank will pay Bahl and Bansal for their 6.5 per cent stake in Snapdeal. The co-founders, along with other directors including early investors Kalaari Capital and Nexus Venture Partners, agreed last week to SoftBank’s proposal to sell Snapdeal to Tiger Global-backed Flipkart.

 
The value of Snapdeal shares and options has eroded and will be nil once the deal is signed. The deal-linked payment will also be extended to employees who do not own Esops to reward those who stayed on.
 

Sources said that employees at Snapdeal individually would be richer by Rs 2 lakh-1 crore. “This would depend on how long an employee has been with the firm, their overall experience, and their position in the company. Some of the senior management team members who have stuck around with the founders even through tough times would be handsomely rewarded,” said a source close to the company.

 
Not only the present employees, some who have left the firm but hold Esops or were asked to leave would be compensated.
 
While in the past one and a half years around 30 ecommerce companies and startups — some even funded by big venture funds — have shut shop, none of the founders had promised such severance packages to their employees.
 
Ecommerce firms such as Askme simply shut shop and left close to 4,000 employees high and dry.
 
According to sources, even when Snapdeal had laid off most of the 10,000 employees it had till February 2016, they were given three months’ salary.

 
Sources said that the founders had — as part of the deal to sell their stake — asked SoftBank to ensure that the 1,000-odd employees were absorbed in the merged entity at least for four to five months so they could have a smooth exit from the company. “The founders have been asking for an employment guarantee that Flipkart should absorb the employee strength in total,” the source added.
 
Last month, Bahl, in an email to his employees, said that his and Bansal’s main priority was the well-being of the workforce.
 
In an e-mail sent to his employees on Saturday, Bahl said, “While our investors are driving the discussions around the way forward, I am reaching out to let you know that the well-being of the entire team is mine and Rohit’s (Bansal, co-founder) top and only priority.”

 
Snapdeal, whose valuation came down from $6.5 billion to less than a billion in the past one year, had to let go of a major chunk of its employees.