Nearly 5000 of Swiggy's employees will become 'crorepatis' following its listing on Wednesday, November 13, as the company's IPO will unlock Rs 9,000 crore worth of employee stock option plans (ESOPs).
What are ESOPs?
Employee stock ownership plans, or ESOPs, are a way to reward employees for their work by offering them company shares in lieu of a salary. In certain situations, however, a combination of salary and shares may be offered, which the worker may keep or sell for cash.
In and of itself, a stock option is a contract that gives the employee the option to exercise it and receive a specific number of shares at a specific time.
Swiggy's ESOP pool
About 5,000 Swiggy workers, both current and former, were offered these choices, and it is anticipated that they will greatly benefit from the Bengaluru-based food delivery behemoth's listing.
A total of 9,000 crore is the company's ESOP pool, and the price per share is Rs 390, which is also the higher price of the price band offered for its initial public offering.
Wealth creation through ESOPS
Regarding wealth creation through ESOPs, Flipkart has been one of the biggest, having made ESOP buybacks adding up to USD 1.5 billion over the years. Similarly, Paytm's November 2021 IPO made 359 crorepatis.
The report claims that Swiggy introduced three ESOP plans with nearly 230 million shares each in 2015, 2021, and 2024. 9 million of these options have been converted into shares, the report also stated.
In the meantime, rival Zomato, based in Gurugram and already listed, created 18 millionaires with its Rs 9,375 crore IPO in July 2021.
Swiggy took special permission from SEBI to sell shares from ESOPs
However, the report claims that Swiggy obtained an exemption from the Securities and Exchange Board of India (Sebi), the market regulator, which allows employees to sell their shares after a month from the listing as opposed to the typical one-year lock-in period.
Beneficiaries of Swiggy ESOPs
The founder and group CEO Sriharsha Majety, cofounders Nandan Reddy and Phani Kishan Addepalli, chief financial officer Rahul Bothra, chief technology officer Madhusudhan Rao, CEO Rohit Kapoor of the food marketplace, and recently hired Swiggy Instamart CEO Amitesh Jha were among the top management who received Esops worth almost Rs 2,600 crore, according to the report.
