Fintech giant Paytm has expanded its Employee Stock Option Scheme (ESOP) by granting an additional 4.81 lakh stock options to its employees under the ESOP 2019 plan. This move aims to retain talent amid ongoing challenges faced by the company. According to an exchange filing, these stock options are convertible into an equivalent number of equity shares, each with a face value of INR 1, and the exercise price is set at INR 9.
With Paytm’s last closing price at INR 724.95, the newly allotted ESOPs are valued at approximately INR 34.8 crore. In conjunction with this expansion, Paytm announced the cancellation of 26.96 lakh stock options due to reasons such as employee resignations and other corporate actions.
This latest development follows a previous announcement in September 2024 when Paytm allotted 2.54 lakh equity shares under its ESOP schemes. Specifically, 2,54,288 shares were issued under ESOP 2019, along with 620 shares under ESOP 2008.
Despite these efforts to incentivize employees, Paytm has been grappling with significant challenges. The company reported a net loss that more than doubled in the first quarter of FY25, reaching INR 840.1 crore, while revenue from operations fell by 36% year-on-year to INR 1,502 crore. The financial difficulties have been exacerbated by regulatory scrutiny following the Reserve Bank of India’s crackdown on Paytm Payments Bank earlier this year.
In response to these challenges, Paytm has shifted its focus towards its core financial services business. Recently, it sold its entertainment and ticketing division to Zomato for INR 2,048 crore to streamline operations and concentrate on payments and financial services distribution.
On a positive note, Paytm secured government approval for its investment in Paytm Payment Services Ltd., allowing it to reapply for a payment aggregator license—a crucial step for its operational continuity.
The company is also bullish on artificial intelligence (AI), appointing former payments CTO Manmeet Dhody as “AI Fellow” to spearhead AI innovation projects within the business. This strategic focus on technology aims to enhance service delivery and customer engagement in an increasingly competitive fintech landscape.
Overall, while Paytm’s expansion of its ESOP pool reflects an effort to motivate employees during turbulent times, the company must navigate significant operational and regulatory hurdles as it strives for recovery and growth in the fintech sector.
