Zomato approves nearly 12 million stock options worth Rs 330 crore for employees

Zomato has approved the issuance of close to 12 million employee stock options (ESOPs) as part of its compensation and incentive program. The move announced in an exchange filing on Wednesday, October 2, 2024, is aimed at rewarding eligible employees and motivating them to contribute to the company’s continued growth in India’s competitive food delivery market.

Zomato has allocated a total of 11,997,768 shares under its ESOP schemes. Of these, 11,997,652 options fall under the ESOP 2021 plan, while 116 options are part of the ESOP 2014 plan, collectively referred to as the Foodie Bay Employee Stock Option Plan.

With Zomato’s shares closing at ₹275.20 on the Bombay Stock Exchange (BSE) on Friday, the ESOPs are valued at approximately ₹330.17 crore. Each option carries a face value of ₹1 and can be exercised within 10 years from the vesting date or within 12 years from the company’s listing date, whichever is later. The options do not have a lock-in period, giving employees flexibility in converting them into equity shares.

The ESOP grant comes amid heightened competition in the online food delivery space, with Bengaluru-based rival Swiggy preparing for an Initial Public Offering (IPO) initially valued at ₹3,750 crore, but recently approved for an extension to ₹5,000 crore. Together, Zomato and Swiggy dominate the Indian food delivery market, holding a near duopoly.

Zomato’s employee stock options are seen as a move to retain talent and drive performance as the company competes for market leadership. The grants are part of an ongoing strategy, with previous ESOPs totalling over 60 million stock options granted earlier this year in July and August.

Zomato Share Performance

Zomato Ltd shares closed at ₹275.20 on Friday, October 4, 2024, reflecting a gain of 2.38% after rising by 6.40 points during the week’s final trading session. The exchange filing regarding the ESOPs was made on October 2, when markets were closed for Gandhi Jayanti. Prior to that, Zomato shares had closed at ₹269 on Thursday, down 1.88% from the previous day.