A year after acquisition of Jabong by Flipkart-owned Myntra, Flipkart has decided to pay off the employees of the fashion portal. The ecommerce major has announced stock options for at least 25 senior employees of Jabong, which will be based on valuation of $10.2 billion for Flipkart.
However, the latest valuation of the Bengaluru-based company was around $11.6 billion after it raised $1.4 billion from a clutch of marquee investors.
“They have given the stock with Flipkart option to 25-30 people at Jabong and as the next round of funding happens, the valuations will surely be revisited,” according to an ET report.
The report stated that Chief Financial Officer Vinod Abrol, chief business officer Rahul Taneja, COO Muralikrishnan B, and chief buying officer Kalyan Kumar are among the beneficiaries of the e-commerce company’s decision.
“Employees have been the strongest pillars of support over the past decade for the entire Group, and we believe in rewarding them in the truest possible sense. An important part of that is to ensure that employees share in the Flipkart Group’s success through our industry-leading ESOP programme,” a Flipkart spokesperson said talking to newspaper.
In September last year, the Bengaluru-based company had handed out employee stock option plans (ESOPs) to over a third of its workforce. It also had cut the cash component of variable pay by up to 40 per cent, depending on the seniority of executives, and replaced it with stock.
In April this year, after raising $1.4 billion investment from Tencent, eBay, and Microsoft at a valuation of $11.6 billion, Flipkart had announced it would issue “differential stock options to all eligible employees.” A statement from the company said that the move is aimed to protect employees from a drop in the share price – a benefit typically enjoyed by investors.
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