In a strategic move aimed at boosting employee motivation and aligning long-term interests, Zomato has recently allotted 38,72,814 equity shares under its Employee Stock Option Plan (ESOP). This allotment is part of the company’s ongoing efforts to reward its employees and increase their stake in the company’s success.
The new issuance of equity shares, each with a face value of Re. 1, follows Zomato’s broader initiative involving the grant of 18,26,27,402 ESOPs under its ESOP 2024 plan. This plan, pending shareholder approval, will cover employees across Zomato and its subsidiaries, allowing them to acquire fully paid-up equity shares at a face value of ₹1 each.
Deepinder Goyal, CEO of Zomato, emphasized the importance of ESOPs in fostering a culture of long-term thinking and innovation. “ESOPs are crucial for developing a ‘founder mindset’ among our senior staff, which in turn drives long-term shareholder value,” Goyal stated in a letter to shareholders. He added that the new ESOP pool, proposed to be 2% of the existing share capital on a fully diluted basis, should meet the company’s needs for at least the next five years.
Goyal also noted that the ESOPs would continue to be issued with a strike price equivalent to the face value of the shares and that vesting would be linked to time and performance conditions. The new ESOP pool is expected to not lead to any immediate increase in ESOP charges, which are non-cash expenses booked only upon granting.
In its latest financial performance, Zomato reported a consolidated net profit of ₹175 crore for Q4 FY24, reversing a loss of ₹189 crore from the same period last year. The company’s revenue for the quarter reached ₹3,562 crore, up from ₹2,056 crore year-on-year. Despite these positive results, the share price closed 3.82% down at ₹193.70 on the BSE.
Looking ahead, the company anticipates an increase in ESOP costs, particularly due to the inclusion of Blinkit’s executive team and senior employees in the ESOP plan. For Q4 FY24, the total ESOP cost was ₹161 crore, up from ₹122 crore in Q3 FY24.
Zomato’s move to increase its ESOP pool aligns with its strategy to cultivate a high-performance culture and ensure that employees are motivated and aligned with the company’s long-term goals.
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