Paytm Expands ESOP Pool With Additional 2.8 Lakh Stock Options

Fintech giant Paytm has expanded its employee stock option plan (ESOP) pool by allocating 2,81,394 shares to the employees.

Of these, 2,78,858 equity shares have been allotted under the Employee Stock Option Scheme 2019, and 2,536 shares under the Employee Stock Option Scheme 2008.

“We wish to inform that the Nomination and Remuneration Committee of the Board of the Company (‘Committee’), on July 7, 2024, at 12:35 a.m., through circulation, approved the allotment of 2,81,394 equity shares with a face value of ₹1 each as fully paid-up to eligible employees upon exercise of vested options,” Paytm said in a exchange filing. 

Based on the stock’s last opening price on Monday, these new stock options are valued at over INR 12.2 Cr.

With this ESOP allocation, the company’s issued, subscribed, and paid-up equity share capital has increased to INR 636,274,090 from INR 635,992,696.

Paytm’s shares were trading up 7.52%, at INR 469.45 at 11:56 AM on the BSE. 

This latest issuance of ESOP shares follows the allocation of 87,373 stock options by Paytm under its ESOP 2019 plan in May.

Earlier in 2023, Paytm had earmarked an additional 1.7 Mn stock options for its employees.

Not to mention, ESOPs are designed to provide employees with company stocks that can be encashed after a specific period at a predetermined value. This practice is typically aimed at retaining talent, enhancing productivity, and attracting new hires.

However, this development seems contradictory to the reports of Paytm’s plans to reduce its workforce by 15-20% this fiscal year as part of a restructuring measure.

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

In addition to these internal challenges, Paytm has been dealing with regulatory setbacks, such as the Reserve Bank of India’s directive to halt operations of Paytm Payments Bank starting March 2024.

It is pertinent to note that many new-age tech startups, including Paytm, have been allotting ESOPs in recent times. Just a few days ago, Tracxn allotted 3.6 Lakh shares under ESOP while PB Fintech, allocated over 48 lakh ESOPs in June.

 Additionally, startups like Delhivery, DeHaat, XYXX, and Purplle have announced ESOP buyback programs to provide liquidity to employees.

On the business front, Paytm is also undergoing several strategic shifts with reports of potential talks with Zomato to sell its movies and event ticketing business. 

Additionally, Goldman Sachs and Marshall Wace sold Paytm shares worth INR 208.35 Cr via bulk and block deals last month. 

In June, Paytm approached the IRDAI to withdraw a general insurance license for its affiliate, Paytm General Insurance Ltd.

Paytm’s financial health has also been under scrutiny, with its net loss tripling year-on-year to INR 550.5 Cr in the March quarter (Q4) of FY2023-24, compared to INR 167.5 Cr in the same period last year. Revenue from operations decreased by 2.9% YoY to INR 2,267.10 Cr, down from INR 2,334 Cr the previous year.