Flipkart, which has been the flagbearer of employee benefits over the years by launching one of the largest Esop programmes in the startup ecosystem, has now possibly disappointed a section of its employees, called Flipsters. Even though the company’s employees were informed during a townhall on Wednesday that they have the option of cashing out 100% of their vested stock options, there seems to be a catch that comes with it.
Employees who are currently working with the online retailer may only be allowed to liquidate 50% of their vested Esops (employee stock ownership plan) during the first year, with the former employees being able to exercise an option of cashing out just 30% of their vested stock options, according to sources familiar with the matter. Flipkart cofounder Sachin Bansal, who is leaving the company, is expected to sell his complete 5.5% stake in the company for about $1 billion, while cofounder and now executive chairman Binny Bansal will also sell about a tenth of his stake.
Moreover, the presently employed have the chance of cashing out 25% each in the second and third year, but the former employees would have to wait it out till the company goes public, added one of the persons cited above. However, there has been no formal communication made to the employees (current and former), and ET could not independently verify the break-up of cash-out options. Flipkart did not respond to queries seeking comment.
This development comes after Walmart announced on Wednesday that the US retail giant will acquire 77% of Flipkart via an investment of $16 billion, $2 billion of which was against fresh equity.
“(Flipkart) doesn’t have money to buy 100% of everyone’s stock options, they need to retain some of the money for growth,” said an industry source, requesting not to be named.
However, some of the former employees ET spoke with were hoping to cash-out entirely. “We were hoping to have the option to liquidate 100% of our Esops because this is the best time to do so,” said a former Flipkart employee, requesting anonymity. “I don’t expect the value of the company to go up any further in the next one to years at least.