Swiggy rewards staff for recovery amid Covid, offers $7-9 mn in ESOPs

Stock ownership plan also embraces laid-off employees as firm gets back to 80-85% of pre-Covid business

Swiggy has initiated an employee stock ownership plan (ESOP) liquidity programme worth around $7-9 million for its existing employees and those who were laid off by the food delivery giant due to the impact by Covid-19 pandemic. “The programme is for the current employees as well as the laid-off staff, who hold ESOPs," said an industry source.

In May, the Bengaluru-based unicorn laid off 1,100 employees across grades and functions, as Covid-19 continued to infect its food delivery and cloud kitchen business. Backed by China's Tencent and Prosus NV, Swiggy had around 8,000 employees at that time. In July, it went for another round of job cuts and laid off 350 employees due to the coronavirus pandemic.

However, last month Swiggy said its overall business has recovered about 80-85 per cent of pre-Covid order values. The recovery is taking place owing to multiple rounds of unlocks and restaurants opening up for business. Also, according to the analysts,  an increasing number of dormant customers are ordering from food delivery firms during Indian Premier League (IPL) games and the festive season resulting in order spikes.

Over 100 million orders were placed on the Swiggy app for food, groceries, medicines and other household items since the lockdown. Over 200 cities have reached 90 per cent of pre-Covid gross merchandise value (GMV) levels with more than 70 cities seeing a full recovery.

Swiggy which has raised total funding of $1.6 billion from investors confirmed that it has initiated the ESOP programme but declined to reveal the amount it is disbursing. This is the second such liquidity programme by Swiggy. The first one was in June 2018, making Swiggy one of the youngest internet start-ups at that point to go for a buyback.

“As the food delivery business makes a steady recovery and the future continues to look promising, we want to reward our team that has worked relentlessly over the last many months with a meaningful wealth creation opportunity through an ESOP liquidity programme,” said Girish Menon, vice president for human resources at Swiggy.

He said that in a short span of six years, Swiggy has built a business that has completely transformed food delivery and convenience while adding tremendous value to stakeholders be it our investors, restaurant partners or delivery partners. 

Over 40 per cent of Swiggy employees with ESOP benefits - “current and those we had to, unfortunately, part ways with earlier this year- will be eligible to exercise their stocks,” said the company. It said some of them will be able to liquidate their ESOPs at as much as 3x premium of the allotted price.

India’s total online food delivery gross merchandise value (GMV) is expected to be $13 billion by 2024 by clocking 12 million daily orders on an average, according to a report by RedSeer.

While food delivery will continue to be the core, RedSeer anticipates significant growth in the other businesses such as ads and groceries, amongst others. These businesses have the potential to contribute up to a quarter of the total GMV.

Last month, edtech unicorn Unacademy, which recently raised $150 million from SoftBank and Facebook said it will have an ESOPs buyback on December 10, for its current and past employees.