With the media reports of SoftBank in talks to sell the e-commerce portal Snapdeal doing the rounds every day, Snapdeal employees who availed the ESOPs( Employee Stock Ownership Plan) are now worried and raising questions about the value of their shares in the company. We reported few days back about Kunal Bahl sending out communication to the employees to instill faith in the employees, going on to say that the employees are the number one priority for the founders. But with so much uncertainty and absolutely no clarity about the future, the employees are more than skeptical.
ESOPs are generally a employee-owner programme, that provides the employees a certain level of ownership in the company thereby motivating them to perform better for the company share value to grow. ESOPs are a common trend in a lot of companies and form a part of the remuneration for the employee. In May 2015, Snapdeal selected almost one third (1200) of its then 4,000 employees, as top performers, and rewarded them with stock options.
MoneyControl reports that if this deal is materialized, the value of ESOPs is certainly going for a toss. According to the report, currently around 2,500-3,000 current as well as former employees hold around 5%-6% stake in company. The report also states that, each ESOP offered by the e-commerce company was valid for a period of 10 years. An employee getting an option would have to serve in the company for a period of at least one year, before getting a chance of vesting his/her stock.
In February this year, the company fired about 600 people, citing cost-cutting as the reason. Apart from this, the founders also informed the staff via en email that they plan to take a 100% pay cut. Snapdeal also stopped the incentive programme for customers that it previously launched through affiliates.