Paytm to expand its ESOP pool before IPO | Mint

Paytm to expand its ESOP pool before IPO

Through the increase of the ESOP pool, Paytm is expected to distribute options to employees who have contributed to the growth of the company. (Bloomberg)
Through the increase of the ESOP pool, Paytm is expected to distribute options to employees who have contributed to the growth of the company. (Bloomberg)


  • The firm will hold an EGM on 2 September to seek shareholder approval

BENGALURU: In a notice to its shareholders on Monday, One97 Communications Ltd (OCL), the parent which owns Paytm, said that it will be expanding its employee stock ownership plan (ESOP) pool, and will be holding an extra-ordinary general meeting (EGM) on September 2 to seek their approval.

As a part of the letter, Paytm said that it looks to alter One 97 Employee Stock Option Scheme 2019 by more than doubling its existing ESOP pool from 24,094,280 equity options to 61,094,280 equity options at a face value of 1 each.

Since its inception, Paytm has formulated two ESOP schemes, namely, One 97 Employee Stock Option Scheme 2008 and One 97 Employee Stock Option Scheme 2019, according to its draft red herring prospectus (DRHP) filed with Securities and Exchange Board of India (Sebi) in mid-July.

Through the increase of the ESOP pool, the company is expected to distribute options to employees who have contributed to the growth of the company, an individual said on condition of anonymity.

Through the EGM, the company will also seek shareholder nod to approve the appointment and remuneration of new directors to its board including—Douglas Feagin, Ashit Ranjit Lilani, Neeraj Arora.

Mint has reviewed a copy of the notice sent to shareholders on Monday evening. A Paytm spokesperson declined to comment on Mint's queries on the matter.

Earlier in July, Mint reported that OCL had shuffled its board replacing Chinese nationals with Indian and US nationals, before its initial public offering (IPO).

In the recent board shuffle, Feagin, senior vice president at Ant Group, joined Paytm’s board, replacing Ant Group chairman and chief executive officer, Jing Xiandong. Ash Lilani, managing partner at Saama Capital, was appointed as an independent director, while former WhatsApp executive Neeraj Arora, rejoined Paytm’s board after exiting it in 2018.

In the upcoming EGM, Paytm will also be seeking shareholder approval on annual remuneration for independent and additional directors appointed to the company’s board.

Goldman Sachs’ Mark Schwartz; Shardul Amarchand Mangaldas & Co.’s Pallavi Shardul Shroff are slated for an annual compensation of 1.85 crore (or $250,000) each for the next three years. While newest entrants, Lilani and Arora are expected to draw an annual compensation of 1.48 crore each (or $200,000), for the same period, the notice to shareholders stated.

The EGM will also look to seek shareholder approval on a revised employment agreement of founder Vijay Shekhar Sharma, as well as for Paytm board’s contribution of upto 1.62 crore for Establishment of Air Quality Action Forum with United Nations Environment Programme (UNEP) through Paytm Foundation.

The contribution is expected to be made in one or more tranches, the letter read.

In July, OCL sought the markets regulator’s approval for its 16,600 crore initial public offering that is poised to become the country’s biggest initial share sale.

As part of the IPO, India’s second most valuable startup will sell new shares worth 8,300 crore, Paytm said in its draft share sale documents. Existing shareholders will sell stocks worth another 8,300 crore through the IPO.

Recently, food ordering platform Zomato Ltd’s 9,375 crore IPO was subscribed 40 times, last month, indicating strong public market interest for India’s consumer internet companies.

The company plans to use 4,300 crore of the fresh issue to grow its existing business lines and acquire new merchants and customers, it said in its DRHP.

Now, Paytm, which is awaiting SEBI’s nod for the IPO, is looking to advance its public offering from November-end to as soon as September, according to individuals aware of the discussion.

For the year ended 31 March, Paytm’s consolidated revenue shrank 11% to 3,187 crore, but it managed to cut losses by 42% to 1,701 crore.

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