Paytm is preparing to help employees convert their employee stock options (ESOPs) into shares before it launches its IPO this year. The digital payments company is consulting with lenders to facilitate 12-month loans, amounting to about Rs 100 crore, so that its employees can carry out the conversion and deal with the ensuing tax payout. At least 300 employees who possess stocks will reportedly benefit from this exercise.
One97 Communications, the parent company of Paytm, is reportedly discussing the lending options with five lenders — including IIFL, ICICI Bank and Edelweiss Capital — so that employees can easily take loans and exercise their stock options. The difference in amount between the fair market price of the shares at the time the options are exercised and what is paid to exercise the option is liable to tax, depending on the salary bracket the employee belongs to.
For employees who are unable to pay back the loans, the lenders will facilitate sale of a portion of their shares to do so. Employees will also be allowed to sell their shares in the grey market to repay their loans in case there is a delay in the IPO of the Company.
Paytm’s present ESOP pool of 24.1 million equity options is expected to expand to 61.1 at a face value of Re 1 each. The plan to expand the ESOP pool will be decided and finalsied based on a vote at the extraordinary general meeting (EGM) to take place in September.