Swiggy, a food and grocery delivery company preparing to launch its initial public offering (IPO), has granted employee stock options (ESOPs) worth $271 million to its founders and top management under a new stock-based compensation plan introduced in April, according to the company’s pre-IPO prospectus.
Around $200 million of this stock was awarded to Sriharsha Majety, Swiggy’s founder and group CEO. The remaining amount went to co-founders Nandan Reddy and Phani Kishan Addepalli, CFO Rahul Bothra, CTO Madhusudhan Rao, CEO of the food marketplace Rohit Kapoor, and Swiggy Instamart’s newly appointed CEO, Amitesh Jha.
Reddy also heads innovation at Swiggy, while Addepalli serves as the company’s chief growth officer.
Majety, who currently owns a 6.23% stake in the company on a fully diluted basis, could see an additional 2.2-2.5% stake through the 2024 ESOP plan. He plans to sell shares worth $7.5 million as part of the IPO’s offer for sale (OFS).
From July to September, Majety and Reddy sold some of their Swiggy shares through secondary transactions. Majety sold around $23 million worth of shares, while Reddy sold approximately $12 million, according to a report on September 27.
Jha, who joined Swiggy in September from Flipkart, was granted stock options valued at $13.3 million, and Kapoor, with the company since August 2022, received $9.8 million in options under the same ESOP plan.
Swiggy also awarded $5.7 million in stock options to Ashwath Swaminathan, who stepped down as chief growth and marketing officer effective September 30.
The stock options awarded to Swiggy’s senior management under the ESOP 2024 plan have a vesting period of one to eight years from the grant date. Any changes in the company’s stock price after its public listing may also affect the value of these stock rewards.
It’s common for companies to offer additional stock options to founders and senior management as performance incentives before going public. This trend is particularly common in consumer internet companies, where founders often experience significant dilution of their stakes during multiple fundraising rounds.
The news was first reported by online publication The Arc.
Swiggy submitted regulatory filings for its $1.25 billion IPO to the Securities and Exchange Board of India (SEBI) in April using the regulator’s confidential filing process. In September, Swiggy submitted an updated draft prospectus after receiving approval from SEBI.
The initial $450 million fresh issue portion of the offering could potentially increase to $600 million. Alongside Majety and Reddy, Swiggy’s major investors, including Prosus, Norwest Venture Partners, Elevation Capital, Accel, Coatue, and Alpha Wave Global, will participate in the offer for sale (OFS) component.
In 2021, Swiggy’s main competitor Zomato granted its founder and CEO Deepinder Goyal stock-based compensation worth nearly $376 million. As of June 30, Goyal held a 4.2% stake in Zomato, valued at over $1.2 billion.
Similarly, Paytm’s parent company One 97 Communications granted ESOPs to its founder and CEO Vijay Shekhar Sharma in 2021 before the fintech company’s IPO. However, these grants reportedly came under SEBI’s scrutiny earlier this year.
Other tech startups, including Freshworks, Delhivery, and PB Fintech, also awarded stock-based incentives to their founders and top management prior to their IPOs in 2021 and 2022. This includes Freshworks founder and former CEO Girish Mathrubootham, Delhivery founder and CEO Sahil Barua, and PB Fintech founders Yashish Dahiya and Alok Bansal.