Zomato Seeks Shareholder Approval for Rs 3,500 Crore ESOP Plan

Zomato has initiated the process to obtain shareholder approval for a new Employee Stock Option Plan (ESOP), encompassing 18.2 crore shares valued at over Rs 3,500 crore, based on current market prices.

Zomato CEO Deepinder Goyal said, the ESOP plan will be gradually disbursed to employees over the next five years, constituting approximately 2% of the company’s fully diluted outstanding share capital.

“ESOPs are important to help build a culture of long-term thinking and innovation and create a ‘founder mindset’ amongst senior employees, which ultimately drives the right outcomes for long-term shareholder value creation.

Also, in people-dependent businesses like ours, where great execution and constant innovation are the only determinants of survival, ESOPs are a great way to drive the high-performance culture that we thrive on,” he added.

Despite Zomato’s recent stock surge, soaring by 62% to Rs 198 per share over the past six months, the company is committed to fortifying its employee-centric approach through ESOPs.

The surge in ESOP expenses, nearly doubling to Rs 161 crore in the March quarter compared to the previous year, is indicative of Zomato’s commitment to incentivizing its workforce amidst a competitive market landscape.

CFO Akshant Goyal reiterated the company’s focus on optimizing employee expenses as a percentage of adjusted revenue, aiming for a downward trajectory despite anticipated increases in ESOP charges.

Zomato’s stock is trading at over 100 times forward earnings, reflecting bullish investor sentiment fueled by projected revenue and profit growth in its quick commerce arm, Blinkit.

Analysts at Goldman Sachs Group Inc. and ICICI Securities Ltd. foresee a positive outlook for Zomato’s quick commerce business, projecting enhanced profitability and revenue in the coming quarters. This optimism underscores the company’s potential to outperform global peers in the tech industry.

Zomato’s move to seek shareholder approval for its ESOP plan underscores its commitment to nurturing a high-performance culture and incentivizing employees amidst a dynamic market landscape.

Disclaimer: This information is covered based on the latest research and development available. However, it may not fully reflect all current aspects of the subject matter.

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