IPO-bound foodtech giant Swiggy has granted employee stock options valued at $271 million to its founders and top management. This͏͏ move͏͏ is͏͏ part͏͏ of͏͏ the͏͏ stock-based͏͏ compensation͏͏ plan͏͏ rolled͏͏ out͏͏ in͏͏ April,͏͏ as͏͏ detailed͏͏ in͏͏ the͏͏ company’s͏͏ pre-listing͏͏ prospectus.
Major͏͏ Allocations͏͏ for͏͏ Founders:
Nearly͏͏ $200͏͏ million͏͏ of͏͏ this͏͏ stock͏͏ has͏͏ been͏͏ allocated͏͏ to͏͏ Sriharsha͏͏ Majety,͏͏ the͏͏ founder͏͏ and͏͏ group͏͏ chief͏͏ executive͏͏ officer͏͏ of͏͏ the͏͏ Bengaluru-based͏͏ company.͏͏ The͏͏ remaining͏͏ options͏͏ went͏͏ to͏͏ co-founders͏͏ Nandan͏͏ Reddy͏͏ and͏͏ Phani͏͏ Kishan͏͏ Addepalli,͏͏ chief͏͏ financial͏͏ officer͏͏ Rahul͏͏ Bothra,͏͏ chief͏͏ technology͏͏ officer͏͏ Madhusudhan͏͏ Rao,͏͏ food͏͏ marketplace͏͏ CEO͏͏ Rohit͏͏ Kapoor,͏͏ and͏͏ the͏͏ newly͏͏ appointed͏͏ CEO͏͏ of͏͏ Swiggy͏͏ Instamart,͏͏ Amitesh͏͏ Jha,͏͏ as͏͏ reported͏͏ by͏͏ ET.
While͏͏ Reddy͏͏ serves͏͏ as͏͏ the͏͏ company’s͏͏ head͏͏ of͏͏ innovation,͏͏ Addepalli͏͏ holds͏͏ the͏͏ position͏͏ of͏͏ chief͏͏ growth͏͏ officer͏͏ at͏͏ Swiggy.
For͏͏ Majety,͏͏ who͏͏ has͏͏ a͏͏ 6.23%͏͏ stake͏͏ in͏͏ the͏͏ company͏͏ on͏͏ a͏͏ fully͏͏ diluted͏͏ basis,͏͏ the͏͏ additional͏͏ ESOPs͏͏ granted͏͏ through͏͏ the͏͏ 2024͏͏ scheme͏͏ could͏͏ increase͏͏ his͏͏ stake͏͏ by͏͏ 2.2-2.5%.͏͏ He͏͏ plans͏͏ to͏͏ sell͏͏ shares͏͏ worth͏͏ $7.5͏͏ million͏͏ through͏͏ the͏͏ IPO’s͏͏ offer͏͏ for͏͏ sale͏͏ (OFS)͏͏ component.
Between͏͏ July͏͏ and͏͏ September,͏͏ Majety͏͏ and͏͏ Reddy͏͏ sold͏͏ shares͏͏ of͏͏ Swiggy͏͏ through͏͏ secondary͏͏ transactions.͏͏ Majety͏͏ offloaded͏͏ a͏͏ stake͏͏ valued͏͏ at͏͏ approximately͏͏ $23͏͏ million,͏͏ while͏͏ Reddy͏͏ sold͏͏ shares͏͏ worth͏͏ $12͏͏ million.
Jha,͏͏ who͏͏ joined͏͏ Swiggy͏͏ in͏͏ September͏͏ after͏͏ his͏͏ tenure͏͏ at͏͏ the͏͏ e-commerce͏͏ marketplace͏͏ Flipkart,͏͏ received͏͏ stock͏͏ options͏͏ valued͏͏ at͏͏ $13.3͏͏ million.͏͏ In͏͏ contrast,͏͏ Kapoor,͏͏ who͏͏ has͏͏ been͏͏ with͏͏ the͏͏ company͏͏ since͏͏ August͏͏ 2022,͏͏ was͏͏ awarded͏͏ stock͏͏ options͏͏ amounting͏͏ to͏͏ $9.8͏͏ million͏͏ under͏͏ the͏͏ new͏͏ ESOP͏͏ plan.
Under͏͏ the͏͏ scheme,͏͏ Swiggy͏͏ granted͏͏ stock͏͏ options͏͏ worth͏͏ $5.7͏͏ million͏͏ to͏͏ Ashwath͏͏ Swaminathan,͏͏ who͏͏ resigned͏͏ as͏͏ the͏͏ company’s͏͏ chief͏͏ growth͏͏ and͏͏ marketing͏͏ officer,͏͏ effective͏͏ September͏͏ 30.
Continue͏͏ Exploring:͏͏ IPO-bound Swiggy launches͏͏ fifth͏͏ ESOP liquidity͏͏ program͏͏ worth͏͏ $65͏͏ Million
Vesting͏͏ Period͏͏ and͏͏ Market͏͏ Implications:
It͏͏ is͏͏ worth͏͏ noting͏͏ that͏͏ the͏͏ stock͏͏ options͏͏ given͏͏ to͏͏ the͏͏ company’s͏͏ senior͏͏ management͏͏ under͏͏ the͏͏ ESOP͏͏ 2024͏͏ scheme͏͏ have͏͏ a͏͏ vesting͏͏ period͏͏ ranging͏͏ from͏͏ one͏͏ to͏͏ eight͏͏ years͏͏ from͏͏ the͏͏ date͏͏ they͏͏ were͏͏ granted.͏͏ Furthermore,͏͏ any͏͏ changes͏͏ in͏͏ the͏͏ company’s͏͏ stock͏͏ price͏͏ after͏͏ the͏͏ public͏͏ listing͏͏ may͏͏ affect͏͏ the͏͏ valuation͏͏ of͏͏ the͏͏ stock͏͏ rewards͏͏ issued.
Companies͏͏ usually͏͏ provide͏͏ additional͏͏ stock͏͏ options͏͏ to͏͏ founders͏͏ and͏͏ senior͏͏ management͏͏ as͏͏ performance͏͏ incentives͏͏ prior͏͏ to͏͏ going͏͏ public.͏͏ This͏͏ practice͏͏ is͏͏ particularly͏͏ common͏͏ among͏͏ consumer͏͏ internet͏͏ firms,͏͏ where͏͏ founders͏͏ often͏͏ experience͏͏ significant͏͏ dilution͏͏ of͏͏ their͏͏ stakes͏͏ during͏͏ multiple͏͏ fundraising͏͏ rounds.
The͏͏ news͏͏ was͏͏ first͏͏ reported͏͏ by͏͏ the͏͏ online͏͏ publication͏͏ The͏͏ Arc.
Swiggy͏͏ submitted͏͏ regulatory͏͏ filings͏͏ for͏͏ its͏͏ $1.25͏͏ billion͏͏ IPO͏͏ with͏͏ the͏͏ Securities͏͏ and͏͏ Exchange͏͏ Board͏͏ of͏͏ India͏͏ (SEBI)͏͏ in͏͏ April͏͏ using͏͏ the͏͏ regulator’s͏͏ confidential͏͏ filing͏͏ route.͏͏ Following͏͏ approval͏͏ from͏͏ SEBI,͏͏ it͏͏ submitted͏͏ an͏͏ updated͏͏ draft͏͏ prospectus͏͏ in͏͏ September.
Continue͏͏ Exploring:͏͏ IPO-bound Swiggy receives͏͏ shareholders’͏͏ approval͏͏ to͏͏ increase͏͏ fresh͏͏ issue͏͏ size͏͏ to͏͏ INR͏͏ 5,000͏͏ Cr
The͏͏ fresh͏͏ issue͏͏ component͏͏ of͏͏ the͏͏ offering,͏͏ originally͏͏ set͏͏ at͏͏ $450͏͏ million,͏͏ may͏͏ be͏͏ increased͏͏ to͏͏ $600͏͏ million.͏͏ In͏͏ addition͏͏ to͏͏ Majety͏͏ and͏͏ Reddy,͏͏ major͏͏ Swiggy͏͏ investors͏͏ participating͏͏ in͏͏ the͏͏ OFS͏͏ component͏͏ include͏͏ the͏͏ company’s͏͏ largest͏͏ shareholder,͏͏ Prosus,͏͏ as͏͏ well͏͏ as͏͏ Norwest͏͏ Venture͏͏ Partners,͏͏ Elevation͏͏ Capital,͏͏ Accel,͏͏ Coatue,͏͏ and͏͏ Alpha͏͏ Wave͏͏ Global.
In͏͏ 2021,͏͏ Swiggy’s͏͏ main͏͏ competitor,͏͏ Zomato,͏͏ granted͏͏ its͏͏ founder͏͏ and͏͏ CEO͏͏ Deepinder͏͏ Goyal͏͏ stock-based͏͏ compensation͏͏ valued͏͏ at͏͏ approximately͏͏ $376͏͏ million.͏͏ As͏͏ of͏͏ June͏͏ 30,͏͏ Goyal͏͏ owned͏͏ a͏͏ 4.2%͏͏ stake͏͏ in͏͏ Zomato,͏͏ which͏͏ was͏͏ worth͏͏ over͏͏ $1.2͏͏ billion.
Likewise,͏͏ Paytm’s͏͏ parent͏͏ company,͏͏ One͏͏ 97͏͏ Communications,͏͏ granted͏͏ ESOPs͏͏ to͏͏ its͏͏ founder͏͏ and͏͏ CEO,͏͏ Vijay͏͏ Shekhar͏͏ Sharma,͏͏ in͏͏ 2021,͏͏ ahead͏͏ of͏͏ the͏͏ fintech͏͏ company’s͏͏ IPO.͏͏ However,͏͏ these͏͏ grants͏͏ reportedly͏͏ attracted͏͏ scrutiny͏͏ from͏͏ the͏͏ markets͏͏ regulator,͏͏ SEBI,͏͏ earlier͏͏ this͏͏ year.
Other͏͏ tech͏͏ startups,͏͏ such͏͏ as͏͏ Freshworks,͏͏ Delhivery,͏͏ and͏͏ PB͏͏ Fintech,͏͏ have͏͏ granted͏͏ stock-based͏͏ awards͏͏ to͏͏ their͏͏ founders͏͏ and͏͏ senior͏͏ management͏͏ prior͏͏ to͏͏ their͏͏ IPOs͏͏ in͏͏ 2021͏͏ and͏͏ 2022.͏͏ Notable͏͏ recipients͏͏ include͏͏ Girish͏͏ Mathrubootham,͏͏ the͏͏ founder͏͏ and͏͏ former͏͏ CEO͏͏ of͏͏ Freshworks;͏͏ Sahil͏͏ Barua,͏͏ founder͏͏ and͏͏ CEO͏͏ of͏͏ Delhivery;͏͏ and͏͏ PB͏͏ Fintech͏͏ founders͏͏ Yashish͏͏ Dahiya͏͏ and͏͏ Alok͏͏ Bansal.
