Online food aggregator, Zomato’s CEO Deepinder Goyal is donating worth $90 Mn proceeds received after vesting his ESOPs into Zomato Future Foundation (ZFF).
Goyal was initially granted some ESOPs before Zomato was listed for IPO; a portion of these ESOPs were vested last month. According to law, there is a minimum one year of vesting required.
This development comes at a time when Zomato is not performing well in the bourses. The share price of Zomato hit a new low at INR 58.65 on May 6 at 3.20 PM, down nearly 4% from Thursday’s last close.
In the press statement, Goyal informed that 100% of the proceeds of this ESOP vesting cycle are committed towards the foundation (ZFF). He further added that he does not want to liquidate all these shares immediately to protect the interests of the shareholders and to reap the most benefit for the foundation.
For the first year, he would liquidate less than 10% of these ESOPs towards the fund (ZFF).
ZFF offers various benefits to the delivery partners. Such benefits include free education of up to two children of all Zomato delivery partners, who worked with the company for over five years.
Further, the scheme includes an education cost of up to INR 50K per child annually. However, the same can go up to INR 1 Lakh in case the delivery partner completes 10 years with the company.
The fund also offers special programs for girls. A few include: higher education scholarships, and educational and livelihood support for the delivery partners’ families who meet with unfortunate circumstances such as accidents while on the job.
Goyal further stated that ZFF is going to be open to donations from other Zomato employees as well. We are exploring other fundraising opportunities for the foundation. An independent governance board for the foundation will also be established, he said.
Zomato has wiped out nearly half of investors’ wealth in the first four months of 2022, down 54% year-to-date. Over the past month, its shares have fallen by 25%.
In July last year, when Zomato debuted on the stock market, it saw an overwhelming response from investors. It opened at a 53% premium over its IPO price and secured a market capitalisation of INR 1 Lakh Cr.
However, its stock started seeing a gradual fall after it ended at INR 137.45 at the end of 2021. Since then, the startup’s shares have continued to fall. The share price had stabilised somewhat since March, hovering in the range of INR 80-82. However, the downward trend that continued in late April has since taken the share price to the 50s.
CCI Probe Affecting Zomato’s Stock Market Performance
India’s antitrust watchdog the Competition Commission of India’s (CCI) order for scrutiny on the Bengaluru-based foodtech giant’s business has heavily affected its market sentiment.
In April this year, the National Restaurant Association of India (NRAI) filed a complaint to CCI against Zomato and Swiggy for using unfair pricing, deep discounting, and breaching some provisions.
CCI said, “The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the Director General (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof.”
Zomato had said at that time it would continue to work closely with the antitrust watchdog to assist with its investigation.
Prior to this, a year ago, NRAI had approached the CCI seeking an investigation into alleged anti-competitive practices of the two delivery unicorns Zomato and Swiggy.
In March this year, Zomato made an investment in quick commerce unicorn Blink It’s $100 Mn funding round. The round is pegged at around $400 Mn.
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Online food aggregator, Zomato’s CEO Deepinder Goyal is donating worth $90 Mn proceeds received after vesting his ESOPs into Zomato… News, B2B-B2C, Foodtech, ServicesInc42 Media