Zomato had on May 13 proposed a new Esop pool for 2024 that would see the issue of 183 million shares. The shares would be worth Rs 3,742 crore as per the stock’s closing price of Rs 204.05 on the BSE Monday.
The Esop plan would lead to a 2% stake dilution for its existing shareholders, founder and chief executive Deepinder Goyal said in a letter to shareholders at the time, adding that the new pool would be sufficient for the next five years.
In the voting that concluded on June 29, over 75% of the shareholders participating in the vote approved the new Esop plan, the firm said in its public disclosure Monday evening.
Companies issue shares to employees to attract and retain talent, align their interests with those of shareholders, and boost overall performance.
“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,” Goyal had said in the letter proposing the Esop plan in May.
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Among institutional investors in Zomato, over 67% voted in favour of the new Esop plan, though it also saw some opposition. Funds like Fidelity, Temasek, Vanguard, Axis and Kotak hold about 72% of the firm.Nearly 100% of non-institutional investors, who hold 28% and include early backer Sanjeev Bikhchandani’s Info Edge, Goyal and retail investors, favoured the plan.
Meanwhile, the firm’s cost from the existing Esop plan almost doubled year on year to Rs 161 crore in the quarter ended March 31, and is set to rise further with the latest approval. Costs incurred under the Esops head are non-cash expenses, and are likely to increase in the ongoing fiscal “on account of grant of Esops to the Blinkit leadership team and senior employees,” the company’s management had earlier said.
Zomato owns the Blinkit quick commerce platform.
At the time, Zomato’s chief financial officer Akshant Goyal had said that despite the rising employee expenses, including Esop costs, the proportion of these expenses in the company’s revenue was coming down.
