Swiggy, a food and grocery delivery company that will soon launch its initial public offering (IPO), granted employee stock options worth $271 million to its founders and top management as part of its latest stock-based compensation plan, which was implemented in April of this year, according to the company's pre-listing prospectus.
Sriharsha Majety, the founder and group CEO of the Bengaluru-based firm, has been given about $200 million in stock. Cofounders Nandan Reddy and Phani Kishan Addepalli, chief financial officer Rahul Bothra, chief technology officer Madhusudhan Rao, food marketplace CEO Rohit Kapoor, and Amitesh Jha, recently appointed CEO of Swiggy Instamart, received the remaining shares.
Reddy is also the company's head of innovation, while Addepalli is Swiggy's chief growth officer.
For Majety, who owns 6.23% of the firm on a fully diluted basis, the additional Esops issued under the 2024 plan might result in an increased interest of 2.2-2.5%. He will sell a share worth $7.5 million via the IPO's offer for sale (OFS) component.
Between July and September, Majety and Reddy sold Swiggy shares in secondary trades. While Majety sold a stake worth around $23 million, Reddy sold shares for $12 million, ET reported on September 27.
Jha, who joined Swiggy from ecommerce marketplace Flipkart in September, was granted options worth $13.3 million, while Kapoor, who has been with the firm since August 2022, was awarded stock options worth $9.8 million under the most recent Esop plan.
Swiggy also gave Ashwath Swaminathan stock options worth $5.7 million under the plan. Swaminathan stepped down as the company's chief growth and marketing officer on September 30.
To be clear, the stock options granted to the company's senior management under the Esop 2024 program have a one to eight-year vesting period from the date of issuance. Any changes in the company's stock price following its public listing may result in value modifications for the stock awards granted.
Before going public, companies frequently give additional stock options to founders and senior management as incentives to perform well. This tendency is especially noticeable in consumer internet companies, where founders face significant dilution of their shareholding over many financing rounds.
The development was originally reported by The Arc, an online news outlet.
Swiggy filed regulatory files for its $1.25 billion IPO with the Securities and Exchange Board of India (Sebi) in April, using the regulator's secret filing process. It submitted an amended draft prospectus in September after gaining Sebi clearance.
The fresh issue component of the transaction, initially valued at $450 million, might be increased to $600 million. Aside from Majety and Reddy, major Swiggy investors who will participate in the OFS component of the issuance include the company's largest shareholder Prosus, Norwest Venture Partners, Elevation Capital, Accel, Coatue, and Alpha Wave Global.
Swiggy's main rival, Zomato, paid its founder and CEO Deepinder Goyal roughly $376 million in stock-based remuneration in 2021. As of June 30, Goyal owned a 4.2% share in Zomato, valued more than $1.2 billion.
Similarly, Paytm parent One 97 Communications handed Esops to its founder and CEO Vijay Shekhar Sharma in 2021, ahead to the fintech company's initial public offering. However, these awards apparently came under scrutiny by the markets regulator Sebi earlier this year.
Other software businesses, like Freshworks, Delhivery, and PB Fintech, have given stock-based rewards to their founders and key executives ahead of their IPOs in 2021 and 2022. These executives include Girish Mathrubootham, founder and former CEO of Freshworks, Sahil Barua, founder and CEO of Delhivery, and Yashish Dahiya and Alok Bansal, founders of PB Fintech.
