Swiggy, one of the leading companies in the food and grocery space, has declared one of the biggest ESOP (Employee Stock Option Plan)liquidity programs to date. The company has announced that it will offer ESOP liquidity to more than 2,000 employees across all departments and levels before launching its IPO. This program allows employees to sell a portion of their company stock options for a combined total of up to $65 million.
What Is ESOP Liquidity?
An ESOP liquidity event refers to a transaction in which employees can liquidate their shareholding in the company. Simply put, if you are an employee of the company and have ESOPs, you can exchange them for cash. The company generally announces these events to acknowledge and reward employees’ contributions to the company’s success, fostering a sense of ownership and long-term commitment.
According to Girish Menon, head of human resources at Swiggy, “Rewarding employees by unlocking wealth-creation opportunities as Swiggy grows has always been a key priority for us.” He further adds, “Employees owning shares of their company creates alignment of incentives and a sharp focus on collaborative excellence, which is a virtuous cycle that we believe in and espouse. As we approach the milestone of a decade of consumer love for Swiggy, the latest ESOP event is an acknowledgment of our employees’ contributions and our commitment to sharing Swiggy’s success and growth with them.”
Key Details Of the ESOP Liquidity Event
- Buyers: Investors who are looking to invest in the company will buy the shares of the company.
- Valuation of the Company: The company received a discount valuation of $9.3 billion for this secondary transaction.
- Who will be selling their Stocks: Along with some of the employees, founders will sell some of their shares.
- How Many Times Are ESOPs Taxed: Under the current taxation system, ESOPs are taxed twice. First, when you exercise the option, and Second, when you sell them.
What Is The Big Picture Behind This?
Swiggy is pursuing secondary transactions to broaden its investor base by attracting additional investors. By doing so, the company aims to establish its real valuation before launching its IPO, as this time, the company is valued at a discount. However, earlier in 2022, the company was valued at $10.7 billion and $12.7 billion in April this year.
