Zomato, a leading player in the foodtech sector, has sought approval from its shareholders for the formulation, adoption, and implementation of a new employee stock option plan, Zomato ESOP 2024, to grant 18.26 Cr employee stock options.
In a filing submitted for its Q4 FY24 results, the company stated that its board had greenlit the proposal during today’s meeting.
Under ESOP 2024, each employee will be entitled to one fully paid-up equity share with a face value of INR 1 for every ESOP exercised.
The filing stated that in order for an employee to execute vested options in accordance with the ESOP 2024, they must pay the exercise price, which is the face value of the underlying equity shares of the firm to be distributed upon exercise.
Continue Exploring: Zomato’s Q4 net profit surges 27% quarter-over-quarter to INR 175 Cr
According to the stock’s last closing price, the ESOP plan would equate to shares valued at more than INR 3,500 Cr.
In the shareholder letter accompanying its Q4 results, Zomato CFO Akshant Goyal stated that the supplementary ESOP pool represents 2% of the company’s outstanding share capital on a fully diluted basis.
Expressing the significance of ESOPs in fostering a culture of “long-term thinking and innovation, and instilling a ‘founder mindset’ among senior employees,” Goyal mentioned that the newly established ESOP pool should adequately suffice for at least the next 5 years.
Zomato’s ESOP expenses amounted to INR 161 Cr in Q4 FY24, compared to INR 122 Cr in the previous quarter. Goyal noted that the company anticipates a further increase in ESOP expenses for FY25 due to the allocation of ESOPs to Blinkit‘s leadership team and senior employees.
Continue Exploring: Zomato’s shares hit 52-week high at INR 207.30 ahead of Q4 results
To be clear, the establishment of the new ESOP pool indicated above won’t raise ESOP fees on its own. Goyal continued, “ESOP charge is a non-cash item and is booked only when the ESOPs are distributed to employees.
Zomato recorded a 26% increase in sequential growth for consolidated net profit, reaching INR 175 Cr for the quarter ended March 2024. This compares to a consolidated net profit of INR 138 Cr in Q3 FY24.
Meanwhile, Zomato’s subsidiary Zomato Payment has opted to voluntarily surrender the license it obtained from the Reserve Bank of India in January to operate as an online payments aggregator.
Continue Exploring: Zomato’s subsidiary ZPPL to surrender RBI license as online payment aggregator
