Flipkart to ensure employee retention via $100 Mn worth ESOPs distribution

As the ESOP related practices in the Indian startup industry improve day by day, Flipkart - the flag bearer of ESOP encashment gives another opportunity to its employees to profit from huge capital gains.

For the second time after acquisition by Walmart, Flipkart, Myntra, and Jabong are distributing employee stock options to top and middle management to ensure their retention in the firm. The size of this delivery is reported to be $100 million with shares priced between $125-130 each.

Flipkart’s ESOP policy details the process of stock vesting whereby employees can start vesting their stock after 1 year. On the first anniversary, 25% of the stocks are vested, following which the deed is done every month for the next three years.

At the same time, the liquidation policy around these ESOPs also elucidates a lengthy process where 50% of vested stock can be liquidated in 1 year and the rest half is divided into two equals to be liquidated in second and third anniversary.

Flipkart is known for allowing its employees to take away the biggest exit worth $800 million at the time of Walmart acquisition. However, this 7 year optimum period for taking away maximised gains is something that the company can still work towards.

For this e-commerce marketplace company, this lengthy vesting and liquifying period becomes important as it looks to retain its best employees in the time of severe competition.

RIL is entering its turf, competitors are poaching the best personnel, so many top-level changes are taking place as a part of the rejig, other unicorn startups in the market are also looking to hire people who have been part of growing and scaling of businesses.

Due to all this, it became important for the company to reward its talented and hardworking employees with a promise of formidable exits in the near future as rumors fly that Flipkart is gearing up for an IPO.

This development was first reported by ET.