Walmart owned digital payments platform PhonePe has announced a buyback plan for employee stock options that were issued last December 2020.
Nearly 75% of the employees are eligible to liquidate their options, due to vest next month, as part of the buyback ,PhonePe announced through a press release.
The company issued options to all its 2,200 employees as part of the employee stock option plan (ESOP) that was launched in December last year. The options allotted to each employee started with a minimum value of Rs 3.5 lakhs and is cumulatively Rs 1,500 crore.
While the founders will not be participating in the buyback, the top leadership of the company is eligible to sell a tenth of their vested options and the other existing employees are allowed to liquidate up to a fourth of their vested options. The ESOP buyback is worth Rs 135 crore.
Manmeet Sandhu, the head of human resources at PhonePe said that the employees will complete one year cliff of their stock vesting next month.
“Almost 75% of our current workforce is eligible to participate in the current buyback offer, and for most it is the first time in their careers that they’ve either owned ESOPs or had a chance to liquidate them,” she said.
PhonePe raised close to $700 million last December in a round led by Walmart. That was the time when the payment services platform officially spun-off from Flipkart to become an individual entity. At the time, it was valued at $5.5 billion.
India's digital payments market, expected to more than double in size to $135 billion in 2023 from 2019 levels, has also attracted the likes of Amazon, Google and Facebook, which have come up with their own systems to woo users.
Firms typically offer ESOPs to attract and retain talent. In some cases, it is estimated that ESOPs make up as much as 60-70% of the compensation packages of top-level executives.
This year has witnessed many companies allowing their staff to liquidate their employee stock ownership plan (ESOP).
Last month, Fashnear Technologies, which operates social commerce platform Meesho, announced a $5.5 million (Rs 40 crore) ESOP program to buy back the vested stocks from eligible employees, both current and former.
In August, Bengaluru-based health and fitness platform HealthifyMe announced Rs 90 crore ($12 million) liquidity to almost 100 current and former team members.
Many other tech-focused companies like Locus, Moglix, Flipkart, upGrad, Whatfix, and Unacademy have also set up ESOP buyback events this year.