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Oyo allots ESOPs worth USD 18 million to furloughed employees

Written by Moulishree Srivastava Published on 

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Oyo had put some of its employees on an unpaid temporary leave starting May 4 for four months.

SoftBank-backed Indian hotel chain startup Oyo plans to allot employee stock ownership plans (ESOPs) worth USD 18 million to all the employees who have been furloughed due to novel coronavirus.

Ritesh Agarwal, Oyo founder and Group CEO in an internal note on Monday, said all the furloughed employees will now be co-owners of the company and would be eligible for ESOPs.

“I would like to recognize your contributions and this love and passion for Oyo by making you a co-owner and shareholder of the company,” he said. “I would like to inform you that all impacted OYOpreneurs would be eligible for ESOPs worth around Rs 130 crore [around USD 18 million].”

In early April, the hospitality chain, which is present across 80 countries, had said it would put some of its employees across the global teams on an unpaid temporary leave starting May 4 for four months. The company, however, didn’t disclose the actual number of employees who would be impacted by the decision. The local media reports claimed that the number of furloughed employees globally may be in thousands.

For the employees that already have stock options, Agarwal said, the company would drop the clause of one-year cliff for vesting ESOPs. A one-year cliff essentially means that an employee doesn’t get any shares if she leaves the company before completing one year.

“This will ensure that everyone departing, regardless of how long they have been with Oyo, can become a shareholder,” Agarwal noted.

Moreover, the company will also provide stocks to employees who are not impacted, he added.

“This is the first time in the history of the company that such a large part of the organization is being inducted as a stakeholder,” he said. “This is a small token of gratitude from us for your contribution in building this company and for your unwavering support to us in good as well as bad times.”

Startup

The company has also announced placement support for those furloughed, who would like to explore new job opportunities, as the timeline for the complete business revival is still uncertain.

“The organization will also come up with an institutionalized placement support system for those who wish to avail it,” Agarwal said.

To find alternative career opportunities for the furloughed employees, Oyo is working with its investors’ portfolio companies to identify openings. Besides SoftBank, Oyo’s backers include Sequoia Capital, Lightspeed Venture Partners, Airbnb, Grab, and Didi Chuxing.

“I am happy to share that in Japan, we have helped about 150 OYOpreneurs through this route,” Agarwal said. He added that the company has also formed an exigency fund for the employees who may need it for some critical illness cases.

Last week, the Gurugram-based company said it has more than USD 1 billion in cash, which is sufficient to run its business for three to four years even without raising capital. It also clarified that the company doesn’t have any plans to exit any of its markets even though the hospitality business has collapsed dramatically across the countries.

“We have the necessary capital runway beyond 3-4 years, considering the cost restructuring and the minimal revenue estimates that we expect. We do not anticipate raising any more capital,” Agarwal said.

However, things have started to get better for the hospitality industry in its home market as the Indian government has allowed hotels to operate across the country from June 8, after over two-months of complete shutdown.

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