Flipkart Sells Marginal Stake of ESOP to Encourage Retention


BANGALORE: This is for the first time where an Indian e-commerce company has sold a marginal stake worth 180-240 crore in its employee trust fund to high net worth individuals in the past few weeks. It is none other than Flipkart.

According to people aware of the transaction, the move was aimed at talent retention by the eight-year-old firm. Such a move was aimed at talent retention by the company. This initiative gives employees who are holding stock options, a way to monetize them, as per ET report. Normally, they wouldn’t be able to do so in absence of a listing.

"At Flipkart, we believe the reason for our remarkable growth has been our people who have demonstrated immense ownership and have consistently gone way beyond the call of duty," a company spokesperson said in an email to ET.

Flipkart, India's largest ecommerce company has raised more than $3.4 billion from global investors such as New York-based Tiger Global and Steadview Capital and was valued at $15 billion in the last round of funding.

Employee stock ownership plan, or ESOP is an employee program that provides a company’s workforce with an ownership (stock options) interest in the company. In an ESOP program, companies provide their employees with stock ownership, often at no up-front cost to the employees. ESOP shares however, are a part of employees’ remuneration for work performed. It can range from 30 percent to as much as 70 percent of compensation.

A lot of companies have been in the talks for giving stock options (ESOPs) to their employees. Firms like Tastykhana, RedBus, Snapdeal, Shopclues, and Infibeam are among eCommerce notables, which claim they can make their low level workers millionaires.