Zomato’s Goyal to donate Rs 700cr ESOP proceeds to Zomato Future Foundation

Food tech giant Zomato’s co-founder and chief executive officer Deepinder Goyal will be donating all his employee stock option plan (ESOP) proceeds worth Rs 700 crore ($90 million) to Zomato Future Foundation (ZFF), according to an internal communication sent by Goyal to Zomato’s employees

Goyal was granted some ESOPS by the investors and board on the basis on past performance, right before the company went public last year. Some of these ESOPs vested last month because there is a minimum 1-year vesting required as per law.

“I am donating all the proceeds from these ESOPs (net of taxes) towards the Zomato Future Foundation,” said Goyal in the internal note.

The Zomato Future Foundation will be covering the education of up to two children of all Zomato delivery partners, up to Rs 50,000 per child per annum on actuals, above a certain service quality benchmark, who have been on Zomato’s fleet for more than five years.

Goyal said this amount would go up to Rs 1,00,000 per child per annum if the delivery partner completes 10 years with Zomato. For women delivery partners, the service thresholds of 5/10 years will be lower. They will also have special programs for girl children and introduce ‘prize money’ if a girl completes 12th grade, as well as her graduation.

ZFF would also offer higher education scholarships over and above these limits for children with higher performance and potential. It would also offer educational and livelihood support for the families of all Zomato’s delivery partners, irrespective of service tenure, who meet with unfortunate circumstances such as accidents, while on the job.

“This is just the start. As and when needed, we will keep expanding and re-evaluation the scope of the Foundation to benefit our ecosystem further,” said Goyal. “Again, 100 per cent of the proceeds of this ESOP vesting cycle are committed towards ZFF.”

To reap the most benefit for ZFF, and protect the interests of the shareholders, Goyal said he does not intend to liquidate all these shares immediately, but over the next few years. “For the first year, I will liquidate less than 10 per cent of these ESOPs towards this fund.”

ZFF is also going to be open to donations from other Zomato employees. Goyal said that the firm is going to explore other fundraising opportunities for the ZFF. It will also set up an independent governance board for the ZFF.

“I am especially pumped for what this Foundation will do for our Delivery Partner’s children. I believe that education is the one and the only thing that can give them a chance to build life much better than their previous generations,” said Goyal. “I also hope that some of these kids grow up to leading the charge at various businesses that we build within Zomato over time, in addition to starting new companies that charge the future course of our country.”

This ESOP donation comes at a time when Zomato has started its 10-minute delivery and is also betting big on Blinkit for its quick commerce. Also, food tech and quick commerce companies are taking measures to address the attrition of the delivery executives.

Last October, Zomato’s chief rival Swiggy and its Board have decided to institute a one-of-its-kind programme that will let employees holding Employee Stock Ownership Plan (ESOP) participate in two distinct liquidity events in the next two years, in July 2022 and July 2023. The entire exercise is expected to be worth $35-40 million at the company’s current valuation.

The e-commerce and gig economy grew by eight per cent in 2020 and 30 per cent in 2021 and is now poised to reach $111 billion by 2024 and $200 billion by 2026, according to TeamLease.

India’s gig economy is set to triple over the next 3-4 years to 24 million jobs in the non-firm sector from the existing eight million, according to analysts. The gig economy has the potential to service up to 90 million jobs in India’s non-farm economy alone, transact over $250 billion in the volume of work, and contribute an incremental 1.25 per cent approximately to India’s GDP (gross domestic product) over the long term.

What is also giving a boost to this growth of the gig workforce is the rapid demand for online services observed by technology platforms such as Swiggy, Zomato, Dunzo, Urban Company, DealShare as well as larger platforms such as Amazon and Flipkart. The adoption of their services has been accelerated by the coronavirus, with an increasing number of consumers shopping online at a higher frequency