Deepinder Goyal, online food aggregator and delivery platform Zomato’s co-founder and chief executive officer said he is donating entire proceeds worth Rs 700 crore ($90 million) received after vesting some of his employee stock option plans (Esops) to Zomato Future Foundation (ZFF).
Goyal was granted some Esops before Zomato went public last year and some of the Esop were vested last month, said Goyal in a statement. There’s a minimum one-year vesting required as per law.
ZFF covers the education of up to two children of all delivery partners of Zomato. This entails up to Rs 50,000 per child annually for partners who have been with the company for more than five years. The amount will increase to Rs 1 lakh if the delivery partner completes 10 years with the company. ZFF also covers higher education scholarships, special programmes for girl children and livelihood support for families of its delivery partners in the event of unfortunate circumstances such as accidents.
Goyal has said that 100% of the proceeds of this Esop vesting cycle are committed towards the foundation. He explained 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, I will liquidate less than 10% of these Esops towards this fund," he said.
He also said that ZFF is going to be open to donations from other employees besides raising other fund-raising opportunities for the foundation. An independent governance board for the foundation will also be established.
Goyal's move underlines how far India's startup ecosystem has come and how more founders of new age companies could be joining the league of corporate honchos in the realm of philanthropy.
Azim Premji of Wipro & family, Shiv Nadar of HCL Technologies & family and Mukesh Ambani of Reliance Industries and family were the top three philanthropists, according to the EdelGive Hurun India Philanthropy List 2021. Notably, Azim Premji was the first Indian to sign the Giving Pledge in 2010 and since then Premji transferred economic benefits from 67% of Wipro’s shares to the Azim Premji Endowment fund.
Giving Pledge is a campaign created by Warren Buffett, Melinda French Gates and Bill Gates to encourage the wealthy to contribute a majority of their wealth to philanthropic causes.
Notably, the India Philanthropy List last year also had names from new age companies last year. Stock brokerage company Zerodha's founders Nithin Kamath and Nikhil Kamath debuted on the list last year with a donation of Rs 25 crore. Flipkart co-founder Binny Bansal, who debuted on the list in 2020, increased his annual donations last year by 155% and donated Rs 14 crore.
The India Philanthropy Report (IPR) 2022 released this year by Bain & Co noted that donations by Indian high net worth individuals (HNIs) could increase with the rise of Indian start-ups and young tech entrepreneurs.
Shriram Subramanian, Founder of a corporate governance advisory firm InGovern Research, told VCCircle that the intention of creating the ZFF is commendable indeed.
"However, unless Zomato works towards profitability and creating wealth for all shareholders, these Esops could just go underwater and be worthless. The Zomato stock price is already below its IPO issue price, and looking at the stock rout in the US, the stock prices of these loss-making unicorns face a bleak future," added Subramanian.
Last year, Zomato became the first Indian internet unicorn to make its stock market debut, taking its market valuation to Rs 1 trillion shortly after listing and then later settled at around Rs 90,000 crore ($12 billion). It was the largest initial public offering (IPO) to hit the Indian bourses since SBI Card’s Rs 10,341 crore IPO in March 2020.
Zomato's IPO also had set the tone for the public float of other new age companies such as Paytm, PolicyBazaar and Nykaa. However, the stocks of these new age companies have taken a beating in the wake of geopolitical uncertainties and fears of interest rate hike by the US Federal Reserve.
