Diwali bonanza for Flipkart staff as board approves USD 100 billion ESOP

Bengaluru: In a bid to attract and retain its 6,000 employees, the Flipkart board has approved a plan to repurchase employee stock option, sources familiar with the development said. 

Companies traditionally use ESOP to compensate, retain, and attract employees. "The overall corpus reserved for buyback of shares from employees is over USD 100 million," said one of the sources to Economic Times.

If the plan materialises then this will be the largest employment stock option plan by any startup in the country.

This development comes after the online retail giant raised about USD 4 billion from Japanese investor Softbank Corporation and the Chinese investor Tencent.

Employees of subsidiaries Myntra and PhonePe will also be a part of the ESOP. The plan is likely to close by December.

ESOPs are contracts between a company and its employees that allow employees to purchase a specific number of the company’s shares at a fixed price within a certain period of time. Flipkart’s stock options are dolled out over four years. Employees can vest in them every month after the one-year threshold.

Senior executives can make “tens of crores”, the sources told ET.