| | MARCH 20229New-age technology companies world-over invest a considerable sum in hiring and retaining valuable talent, with ESOPs being the most preferred route. ESOPs are granted to key employees in order to reward & retain them and to create a sense of ownership & participation amongst them. Recently listed Paytm, India's leading digital payments and financial services company, has created one of the largest ESOP pools in the country ­ a diluted share count of about 695 million shares, including a granted ESOP pool of 31 million options.The company had recently held a postal ballot for the approval of its Employee Stock Ownership Plans (ESOPs). The company witnessed 92 percent votes in favour of the resolution. Nearly 99 percent of votes from Paytm's shareholders categorized as public non-institutions were in favour of the ESOPs, while 67 percent of those from its public institutional investors were against the same. Recently, in the case of newly-listed stocks like Zomato, a majority of institutional investors had similarly voted against ESOPs schemes.The resolutions passed were - Amendment and Ratification of One97 Employees Stock Option Scheme 2019, Approval to extend the benefits under One97 Employees Stock Option Scheme 2019 to the employees of subsidiary companies of the company, and Approval to extend the benefits under One97 Employees Stock Option Scheme 2019 to the employees of group companies of the company.Paytm had also recently released its Q3 earnings results. During the October-December quarter, the company saw its revenues jump by 89 percent YoY to Rs. 1,456 crore. A major part of the company's Q3 results was seen in its financial services play ramping-up. The company disbursed 4.4 million loans (401 percent YoY growth) aggregating to a total value of Rs. 2,181 crore (366 percent YOY growth). Meanwhile, the contribution profit for Q3 FY 2022 at Rs. 454 crore represents a 560 percent YoY growth. In an exchange filing with its updated business numbers for January 2022, the company saw highest ever growth in average monthly transacting users (MTU) at 68.9 million, up 40 percent YoY.Recently, Goldman Sachs in a report dated February 7th had noted that Paytm's Employee Stock Ownership Plan (ESOP) costs will reduce gradually and is currently at par with other listed tech companies in India as well as globally."We forecast ESOP charge for Paytm to be highest (at Rs. 3.9 billion per quarter) for first two years (when the first tranche vests, per Paytm), and then gradually reduce over the next three years. Paytm also has about 15 million ungranted options, and per our estimate, the total share count could increase by c.46 million (or seven percent of current outstanding), if all options were to be vested/granted", said the Goldman Sachs note."We note that as a proportion of total operating expenses, Paytm's ESOP cost is not significantly different vs. other global platforms such as Airbnb and Doordash, as well as recently listed India internet peers such as Zomato and PB Fintech", it added. PAYTM'S ESOP RESOLUTIONS RECEIVE FULL APPROVAL FROM SHAREHOLDERSBy CEO Insights TeamINFOCUSNEARLY 99 PERCENT OF VOTES FROM PAYTM'S SHAREHOLDERS CATEGORIZED AS PUBLIC NON-INSTITUTIONS WERE IN FAVOUR OF THE ESOPS, WHILE 67 PERCENT OF THOSE FROM ITS PUBLIC INSTITUTIONAL INVESTORS WERE AGAINST THE SAME
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