close
close

Zomato allocates ESOP worth Rs 330 crore to employees – Trak.in

Posted on by darion

omato, one of India’s leading food delivery platforms, has made a significant move in its employee compensation strategy. The company has approved the issuance of nearly 12 million employee stock options (ESOPs), demonstrating its commitment to rewarding and retaining top talent in the fiercely competitive food delivery market.

Zomato allocates ESOPs worth Rs 330 crore to employees

Breaking down the numbers

  • Total number of ESOPs allocated: 11,997,768 shares
  • 2021 ESOP Plan: 11,997,652 options
  • ESOP Plan 2014: 116 options
  • Estimated value: ₹330.17 crore (based on closing share price of ₹275.20 on BSE)

Flexible conditions for employees

ESOPs have employee-friendly terms:

  • Face value: £1 per option
  • Implementation period: Within 10 years from the date of acquiring rights or 12 years since the company was listed on the stock exchange, whatever comes next
  • No lock-in period, allowing immediate conversion to shares

Strategic timing in a competitive landscape

The ESOP grant comes at a crucial time:

  • Rival Swiggy is gearing up for IPO, initially priced at ₹ 3,750 crore, now extended to ₹ 5,000 crore
  • Zomato and Swiggy dominate the Indian food delivery market as a near-duopoly

Part of a larger compensation strategy

The current ESOP grant is not an isolated event:

  • Previous award of over 60 million stock options in July and August 2024
  • A consistent approach to the use of ESOPs as a key element of employee remuneration

Impact on Zomato stock performance

  • Closing price on October 4, 2024: £275.20
  • Weekly profit: 2.38% (6.40 points)
  • ESOP announcement published on October 2 (market holiday)
  • Previous close September 28: £269 (down 1.88%)

The bigger picture: talent retention and market leadership

Zomato’s generous ESOP policy serves multiple purposes:

  1. Retaining the best talent in a competitive labor market
  2. Aligning employee interests with company results
  3. Motivating employees to drive growth and innovation
  4. Strengthening Zomato’s position against competitors like Swiggy

Looking to the future

As the food delivery market in India continues to evolve, Zomato’s ESOP strategy can play a key role in maintaining its market position. A company’s focus on employee ownership can be a key differentiator in attracting and retaining the talent necessary to maintain leadership in this dynamic industry.