Paytm Allocates 1.36 Lakh ESOP Shares to Employees
Leading fintech giant strengthens employee retention strategy through expanded stock options, setting precedent for Tamil Nadu’s growing startup ecosystem
In a strategic move to enhance employee ownership and retention, One97 Communications Ltd, the parent company of digital payments leader Paytm, has announced the allocation of 1,36,528 equity shares under its Employee Stock Option Plan (ESOP). This latest expansion, approved by the company’s Nomination and Remuneration Committee, has increased the company’s total paid-up equity share capital from Rs 63.75 crore to Rs 63.76 crore.
The development marks Paytm’s third major ESOP expansion in recent months, demonstrating the company’s commitment to employee wealth creation amid its improving financial performance. This latest allocation follows a significant ESOP expansion in January, which saw the addition of 2,03,137 stock options at a face value of Rs 1 per share and an exercise price of Rs 9 per stock option.
Mr. Vijay Shekhar Sharma, Founder and CEO of Paytm, emphasized the company’s employee-first approach: “Our ESOP program is designed to create long-term wealth for our employees who have been instrumental in Paytm’s growth journey. This expansion reflects our commitment to sharing our success with the team that makes it possible.”
The company’s ESOP strategy has garnered attention from Tamil Nadu’s burgeoning startup ecosystem, where companies are increasingly looking to implement similar equity-based compensation models. The state, home to over 4,000 registered startups, has seen a growing trend of companies adopting ESOP programs to attract and retain top talent.
Dr. Radhakrishnan, President of the Tamil Nadu Startup and Innovation Council, commented on the development: “Paytm’s ESOP expansion sets a powerful precedent for startups in our region. We’re seeing increased interest from local companies in implementing similar programs to compete for talent in the competitive tech sector.”
The ESOP expansion comes at a time of significant financial improvement for Paytm. The company reported a remarkable turnaround in Q2 FY24, posting a profit of Rs 930 crore, compared to a loss of Rs 840.1 crore in the previous quarter. Revenue from operations also saw healthy growth, increasing by 10.51% to reach Rs 1,659.5 crore in Q2 FY24.
However, the company has faced some regulatory challenges, including a recent Rs 1.19 crore fine from the Central Goods and Services Tax (CGST) Department for alleged non-compliance with tax regulations. Despite this setback, Paytm continues to expand its operations and employee benefits programs.
The impact of Paytm’s ESOP expansion extends beyond its immediate employees. According to the Tamil Nadu Startup Hub, the number of startups offering ESOPs in the state has increased by 45% in the past year, with over 200 companies now providing equity-based compensation to employees.
For Tamil Nadu’s startup ecosystem, Paytm’s ESOP expansion serves as a blueprint for building sustainable employee retention strategies. The state’s IT corridor, particularly in Chennai, has seen a 30% increase in startups implementing ESOP programs in the past six months alone.
The move also coincides with significant international developments for Paytm, including the recent divestment of its stock acquisition rights in Japan’s PayPay to SoftBank Vision Fund 2 for $279.2 million, highlighting the company’s focus on core market operations and employee welfare
