ETtechEcommerce leader Flipkart announced a $50 million employee stock buyback programme on Friday, which will provide liquidity to around 7,000–7,500 staff members ahead of the Walmart-owned company's initial public offering (IPO).
All active employees as of July 5 can liquidate up to 5% of their outstanding options vested since July 6, 2022, Flipkart group chief executive Kalyan Krishnamurthy wrote in a note to employees. The buyback price is set at $174.32 per option, with payments expected in August 2025.
The company has been a major wealth creator among its peers in India's internet economy, with multiple employee stock option plan (Esop) buybacks aggregating to $1.5 billion across various tranches in the past six to seven years.
2018: When the company was acquired by Walmart in 2018, Flipkart undertook a $500 million buyback as part of the deal. It was only for current employees, however, who could sell their vested stock options. It was completed over three to four years.
2019: Flipkart disbursed a fresh set of Esops to its senior and middle-level staff in an attempt to retain key talent after Walmart took over the reins. The Esop distribution was part of the company’s annual performance assessment programme.
2021: The Bengaluru-based etailer purchased $80-85 million worth of shares from employees as part of its $3.6 billion financing round. This was extended to only existing employees.
2023: Flipkart’s last major Esop buyback was in 2023, when it bought back stock options worth $700 million from current and former employees after the PhonePe split. More than 24,000 individuals, including former Flipkart and Myntra employees, were eligible for payments from the buyback.
That was the largest Esop buyback by an internet firm in India, topping the $500 million offered by Flipkart when Walmart acquired it in 2018.
Why do companies offer Esops?
Companies offer Esops for various reasons, including:
Providing liquidity to employees without launching an IPO: Esop is an essential tool that provides liquidity to employees without the company having to go public. Eligible staff can offload a portion of their vested shares back to the company, offering them financial returns without the company needing to take the IPO route.
Talent retention: Esops are financial recognition that helps retain employees and keep them motivated. Some companies also combine buybacks with re-grants of options to maintain incentives.
Reallocation of shares: Esop buybacks free up shares granted to employees, enabling companies to reissue them to new or existing employees.
All active employees as of July 5 can liquidate up to 5% of their outstanding options vested since July 6, 2022, Flipkart group chief executive Kalyan Krishnamurthy wrote in a note to employees. The buyback price is set at $174.32 per option, with payments expected in August 2025.
The company has been a major wealth creator among its peers in India's internet economy, with multiple employee stock option plan (Esop) buybacks aggregating to $1.5 billion across various tranches in the past six to seven years.
2018: When the company was acquired by Walmart in 2018, Flipkart undertook a $500 million buyback as part of the deal. It was only for current employees, however, who could sell their vested stock options. It was completed over three to four years.
2019: Flipkart disbursed a fresh set of Esops to its senior and middle-level staff in an attempt to retain key talent after Walmart took over the reins. The Esop distribution was part of the company’s annual performance assessment programme.
2021: The Bengaluru-based etailer purchased $80-85 million worth of shares from employees as part of its $3.6 billion financing round. This was extended to only existing employees.
2023: Flipkart’s last major Esop buyback was in 2023, when it bought back stock options worth $700 million from current and former employees after the PhonePe split. More than 24,000 individuals, including former Flipkart and Myntra employees, were eligible for payments from the buyback.
That was the largest Esop buyback by an internet firm in India, topping the $500 million offered by Flipkart when Walmart acquired it in 2018.
Why do companies offer Esops?
Companies offer Esops for various reasons, including:
Providing liquidity to employees without launching an IPO: Esop is an essential tool that provides liquidity to employees without the company having to go public. Eligible staff can offload a portion of their vested shares back to the company, offering them financial returns without the company needing to take the IPO route.
Talent retention: Esops are financial recognition that helps retain employees and keep them motivated. Some companies also combine buybacks with re-grants of options to maintain incentives.
Reallocation of shares: Esop buybacks free up shares granted to employees, enabling companies to reissue them to new or existing employees.
