Paytm grants ESOPs worth over Rs 222 Cr to its employees

One97 Communications, the parent company of digital payments company Paytm, has granted new stock options under its existing ESOP plan to its employees. The development comes at a time when the company’s share price is trading at one of its lowest since the listing in November last year.

The company has granted 39,70,721 stock options under One 97 Employees Stock Option Scheme 2019 to the eligible employees, One97 Communications made a disclosure on a stock exchange filing. The company has set the exercise price of these stock options at Rs 9 each.

The company, however, did not disclose the number of employees who will be benefited after this grant.

Paytm further clarified that the scheme also provides for the manner in which options would be dealt with in case of death, permanent incapacity, resignation, termination, retirement, and abandonment.

Our data tracking platform Fintrackr estimates that the value of these new ESOPs granted by One97 Communications stood at Rs 222.5 crore as per the company’s stock prices recorded today.

In a separate filing, Paytm has also allotted 177,114 equity shares to employees, who have exercised their options. One97 did not disclose the individuals who have been granted these stock options in its filings.

Some brokerages have flagged the large ESOPs program as a reason why profits will remain a drag on any profitability in the foreseeable future. That is one reason why Paytm faced resistance from institutional shareholders as two-thirds of them voted against the proposal. However, the ESOP ​​resolution was passed with almost 93% of the overall votes being in favour of the company.

Founder Vijay Shekhar Sharma, in a recent letter to shareholders, has promised “Paytm should be operating EBITDA breakeven in next six quarters (ie EBITDA before ESOP cost, and by the quarter ending September 2023), well ahead of estimates by most analysts. We are going to achieve this without compromising any of our growth plans.”

Before going public, Paytm had allotted equity shares to its 166 former and current employees following the exercise of ESOPs held by them in August last year. According to Paytm’s regulatory filings, the company had allotted 10,11,582 equity shares to the employees who have submitted the application for exercising the options vested to them under ESOP Scheme 2008 and ESOP Scheme 2019.

When it comes to ESOPs allotments, beauty centric online marketplace Nykaa and footech company Zomato also faced similar resistance after going public.

Last week, Deepinder Goyal, founder and chief executive officer of foodtech company Zomato, announced that he will donate all proceeds of his recently vested ESOP worth Rs 700 crore to Zomato Future Foundation.