Walmart to buy Flipkart ESOPs worth $800 mn

Flipkart employees with stock options could be in for a windfall as parent company Walmart is set to purchase employee stock ownership plans (ESOPs) worth $800 million following its $16-billion acquisition of India’s largest e-commerce company.

Citing Walmart’s filing with the US Securities and Exchange Commission, The Economic Times reported that the US retail behemoth is obligated to purchase 6,242,271 shares - more than half of Flipkart’s ESOP pool of 11,947,026 shares.

Current employees of Flipkart will be allowed to liquidate their ESOPs at $126-128 a unit, depending on the charges applicable.

In all, Flipkart’s total ESOPs are worth around $1.5 billion based on the per-share purchase price, the report added.

"The ESOP repurchase programme, a yardstick for the industry, is part of our continuing efforts to thank and reward our employees for their service," a Flipkart spokesperson said.

Technology and internet firms typically offer ESOPs to attract and retain talent. In some cases, it is estimated that ESOPs make up as much as 60-70% of the compensation package for top-level executives.

After announcing its agreement to acquire Flipkart in May, Walmart formally completed the deal a few weeks ago.

Flipkart employees will be allowed to liquidate 50% of their vested ESOPs post the acquisition, another 25% at the end of one year following the first liquidation, and the remaining 25% at the end of two years following the first liquidation.

Last December, Flipkart said that it had completed the $100 million (Rs 645 crore) employee stock options repurchase programme that it had initiated two months previously.

Flipkart bought back ESOPs from more than 3,000 current and former employees of the company and its subsidiaries Myntra, Jabong and PhonePe.

It was the fourth time in five years that Flipkart had bought back stock options from employees.