OYO plans to offer ESOPs to all employees, subject to board approvals
After furloughing thousands of employees amid the coronavirus pandemic, SoftBank-backed OYO has now decided to offer all its employees, including furloughed employees, deeply discounted ESOPs.
After furloughing thousands of employees amid the coronavirus pandemic, SoftBank-backed OYO has now decided to offer all its employees, including furloughed employees, deeply discounted ESOPs. The company claims that the ESOPs would be worth Rs 130 crore. The programme is subject to requisite board approvals which OYO hopes to obtain in the next few weeks.
OYO had put some of its India employees on furlough from May 4 for four months, and had also asked all its employees to take 25 percent pay cuts from April to July as the company revenues fell globally due to the COVID-19 crisis. There is no update on the end-date of the furlough for now.
OYO’S internal town hall notes
Indeed, the ESOP move has not come out of blue. Back on June 1, 2020 Ritesh Agarwal, founder and Group CEO, OYO, had announced in an internal town hall note that all furloughed employees impacted by COVID-19 will be eligible for ESOPs.
Agarwal said: “Details on your specific grants will be shared on email separately. In addition to above, we also understand that some of you may already have stock options. For those employees, we are dropping the one-year cliff on the vesting of stock options for everyone we have hired in the past year. This will ensure that everyone departing, regardless of how long they have been with OYO, can become a shareholder.”
He reemphasized that “necessary corporate approvals are being organised.”
In a follow up internal note on June 6, 2020 to all remaining employees, or OYOpreneurs as the companies calls them, impacted by the organisation wide pay cuts due to COVID-19, Agarwal announced: “We will be making all of you co-owners by offering you Restricted Stock Units (RSUs), effective June 1, 2020, proportionate to the amount of your salary reduction.
He had added: “This program is subject to board and shareholder approval, which we aim to obtain in the next few weeks.”
What do deeply discounted ESOPs mean?
According to the company, these RSUs will have a strike price of Rs 10 per unit and will have a cliff vesting of one year from the date of grant. That’s another caveat as all employees have been offered deeply discounted ESOPs comparable to RSUs. This means all employees have been enabled to buy the company stock at a deeply discounted pre-determined price of value.
OYO’s tech team bounces back
According to a report by Moneycontrol, amid the pay-cuts, OYO has decided to offer its technology team increments and promotions. The tech team will also be getting their salary back which was deducted over the last four months.
The fine print
According to people aware of the matter, the number of furloughed employees globally could run into thousands. Sources also told CNBC-TV18 that the agreement includes a “disparagement” clause, which restricts any of these employees to speak out against OYO.
This new ESOPs blueprint includes employees on furlough and all other employees, all of whom have had to accept a pay cut as a result of COVID-19 and sign separation agreements.
While several startups had to lay off employees during pandemic, OYO chose to furlough some of its workforce. However, it is still to be seen if the company will bring back its furloughed staff.
First Published: Jul 6, 2020 7:18 PM IST
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