After downsizing, Snapdeal doles out payouts to employees

After almost two months of a massive lay-off initiative, Snapdeal is understood to be doling out payouts to the affected employees, according to ‘The Economic Times’ report. The company is now on course to meet the timeline it had set out for the payouts. While Snapdeal has declined to specify the exact number of employees affected by the layoffs, it is believed to range between 1000 and 1500 across its three major units: online marketplace Snapdeal, digital payments platform FreeCharge and logistics arm Vulcan Express, says ET report.

Meanwhile, concerns over the value of employee stock options (Esops) continue to dominate. About 4-5% of the company’s total shareholding has been reserved for Esops, the value of which has plummeted over the past few months. At its peak, Snapdeal was valued at $6.5 billion, having raised over $1.7 billion in funding from a multitude of investors, including Soft-Bank, Ontario Teachers’ Pension Plan, PremjiInvest and BlackRock.

However, with the company now poised to be sold to Flipkart for $1 billion, employees have begun to write off their Esops, which will be worth $40-50 million if sold at that price. In May 2015, Snapdeal had enhanced the pool of its Esop holders and made several senior hires with the promise of heavy chunks of Esops.

Employees and investors, who spoke with ET on the condition of anonymity, said the value of their shares and options has eroded by as much as 90 per cent. “I joined Snapdeal two years ago, when the company was valued at $6.5 billion. I was entitled to shares worth Rs 7-8 lakh. When I checked the value of my shares in the first week of March, they had fallen to Rs 1.8 lakh,” said a former employee involved in strategy and business development at the organisation. Several employees that ET spoke to said the company is meeting its payout deadlines.
Source: The Economic Times