Paytm allotting 2.5 lakh equity shares under the ESOP scheme: Who is gaining?

Paytm, one of India’s largest fintech companies, rewarded its staff with 2.54 lakh equity shares under its Employee Stock Option Plan – ESOP. The company board approved the allotment, which it announced on September 4. With a face value of INR 1 each, these fully paid shares are a nice bonus to the eligible staff.

Of these, 2,54,288 shares came from Paytm’s ESOP 2019 plan, with the remaining 620 issues under the older ESOP 2008 scheme. This latest allotment increased Paytm’s paid-up share capital from INR 63.63 Cr to INR 63.66 Cr. At its closing price of today, the shares are valued at about INR 5.65 Cr. Employees can also get them at an exercise price of just INR 9 per share.

How do the employees of Paytm benefit?

This share allotment incentivizes Paytm employees by giving them direct awards. A rise in the stock price is directly proportional to the increase in their share value. ESOP is not a bonus but has the power of a national award where an employee’s success is aligned with the company’s. It gives a feeling of ownership and belonging.

So have many Indian technology companies. In recent months, Zomato, Nykaa, and Mamaearth, among others, have given equity shares to employees. It is a brilliant way to attract and retain the best talent and share future growth with people who have helped one achieve it.

A Strategic Decision in Tough Times

The company issued the shares at the wrong time. The Reserve Bank of India has constricted its regulations regarding Paytm Payments Bank, which has reflected in the company’s performance. Paytm’s net loss jumped to INR 840.1 Cr in Q1 FY25 from INR 358.4 Cr last year. Revenue also fell by 36%.

Paytm, too, has been relenting to changes in how it functions. It recently sold its entertainment and ticketing business to Zomato for INR 2,048 Cr to focus on the core payments and financial services businesses. The firm has also received the government’s approval to invest in Paytm Payment Services, which would lead to securing a license as a payment aggregator.

Conclusion

With this ESOP allotment, allows its employees to share in the future. As far as some of the challenges, the event throws light on its earnestness in rewarding its people. Therefore, Paytm links employee rewards with company success and is building a more robust, motivated workforce for better positioning in the times to come.