Employees of Flipkart will receive a one-time cash payout from a $700 Mn employee stock option plan (ESOP) buyback.
Separation
This is part of the process of its separation from fintech giant PhonePe later this month.
Flipkart acquired PhonePe in 2016 for $20 million.
The latter operated as a subsidiary till December 2022 when both companies announced full separation of ownership.
Previous buybacks
The ecommerce giant has conducted several ESOP buybacks before.
In 2018 it bought shares worth $500 Mn from its employees during its acquisition by Walmart for $18 Bn.
Then in 2021, it bought back shares worth $85 Mn as part of its $3.6 Bn funding round.
The current payout
The record date for the buyback has been set on December 23, 2022, and the payment would depend on ESOPs employees held as on that date.
It will only be on all vested options for current and former employees.
Current employees will also get benefits based on their unvested options.
The payouts will be made by July 31 and the same was communicated to beneficiary employees.
Share value
All the former and current employees eligible will receive $43.67, or around INR 3,615 per unit of ESOP they hold in Flipkart.
This is to compensate for the loss of PhonePe’s value in the stock option since it is separating from the group.
Beneficiaries
More than 24,000 employees, including Flipkart and Myntra staff who have left will be given the cash payout based on the number of stock options they have.
The payouts to each employee will still be subject to applicable withholding taxes and other tax rules in the respective countries of ESOP holders.
Due to this buyback, Flipkart’s valuation will see a drop from $37.6 Bn to $33 Bn.
PhonePe’s future
Since its separation from Flipkart it has been in the process of a fundraise of $1.1 billion from the likes of TVS Capital Funds and General Atlantic, among others.
It has since raised $850 Mn in multiple tranches from its largest shareholder Walmart, along with investors such as General Atlantic and Ribbit Capital.
