 "Flipkart")
Flipkart is set to provide its employees with a one-time cash payout from a $700 million employee stock option (Esop) buyback. This move comes as Flipkart separates from payments firm PhonePe in December 2022. The payout aims to compensate for the loss of PhonePe's value in the stock option, according to a report by the Economic Times.
According to this note, these payouts will be disbursed by July 31. Eligible current and former employees will receive approximately Rs 3,615 (or $43.67) for each unit of Esop held in Flipkart. The payout is subject to applicable withholding taxes and other tax regulations in the respective countries where Esop holders reside. The company is also currently finalising the necessary legal formalities for the payout.
As reported earlier by Business Standard, Flipkart's $700 million one-time cash payout will benefit at least 25,000 past and present company employees, making it one of the biggest wealth reaction instances in the Indian startup ecosystem
The Esop buyback is part of a larger fundraising effort by PhonePe, aiming to secure $1.5-2 billion in a round led by Flipkart and its primary shareholder, the United States retail giant Walmart. So far, PhonePe has raised approximately $850 million, with private equity major General Atlantic contributing nearly $550 million. This investment has valued the digital payments firm at $12 billion.
The Flipkart group is also reportedly offering existing investors and Esop holders the opportunity to reinvest their Esop payouts in the latest round of PhonePe's fundraising.
To determine the entitlement for the buyback, the record date has been set as December 23, 2022, and the payment will be based on Esops held as of that date. The payout will encompass all vested options for both current and former employees, while current employees will also receive benefits for their unvested options, as stated in the internal note.
