Paytm Expands ESOP Pool, Allots Over 1.1 Lakh Stock Options

Fintech giant Paytm has expanded its employee stock option plan (ESOP) by allotting 1,10,357 equity shares to its eligible employees. 

In an exchange filing, Paytm said, “We wish to inform that the Nomination and Remuneration Committee of the Board of the Company (“Committee”), on August 5, 2024 has approved the allotment of 1,10,357 equity shares having face value of INR 1 each, as fully paid-up, to the eligible employees, upon exercise of vested options under Employee Stock Option Scheme 2019.”

As a result of this allotment, the startup’s issued, subscribed and paid-up equity shares have increased to 636,384,447 (63.63 Cr) from 636,274,090 (63.62 Cr). 

The fintech major has set the exercise price per share for stock options under this allotment at INR 9, a premium of INR 8 apiece. 

As per Paytm’s last closing price on Monday, the new stock options amount to over INR 5.4 Cr. 

The allotment follows the allocation of 6,000 shares under ESOP 2019 last month. A week before this allotment, it granted another 2,81,394 shares under its ESOP 2019 plan in July. 

In May, the company granted 87,373 stock options under the same ESOP plan. Last year, Paytm earmarked an additional 1.7 Mn stock options for its employees. In 2023, earmarked an additional 1.7 Mn stock options for its employees.

It is pertinent to note that via ESOP companies offer their employees with its stocks that can be chased in after a specific period. It is typically intended to retain talent, enhance productivity, and attract new hires. 

The development comes against the backdrop of Paytm showing measures which are a mix of both, for and against its workforce. While it has made 4 ESOP offerings so far in 2024, reports around the company shedding its workforce by 15-20% this fiscal year were also making the rounds lately. 

Besides, several employees have reportedly approached the Ministry of Labour and Employment, alleging “unlawful termination” without due compensation.

After a slew of setbacks on the regulatory front, Paytm received a big relief with the government’s approval to invest INR 50 Cr in its payments arm, Paytm Payment Services. The approval will enable Paytm to apply for an online payment aggregator (PA) licence from the Reserve Bank of India.

Not to mention, the fintech major has been dealing with regulatory setbacks, such as the RBI’s directive to halt operations of Paytm Payments Bank starting March 2024.

Last month, Paytm also got an administrative warning letter from SEBI over related party transactions with PPBL in FY22, which were conducted without due approval of either the audit committee or the shareholders.

This comes at the heart of several new age tech startups including Paytm allotting ESOPs in recent times. For instance, Tracxn, Jupiter, Mamaearth, Yubi, TBO Tek, ideaForge, Delhivery, among others offered ESOP in the last one month. 

On the financial front, Paytm’s consolidated net loss widen to INR 840.1 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25), up 134% year-on-year from INR 358.4 Cr in the year ago-period. Revenue from operations dropped 36% in Q1 FY25 to INR 1,502 Cr from INR 2,342 Cr in the corresponding quarter last year.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.