Equity management
ESOP Management- Fund management
Liquidity Solutions - Fund managementESOP Consulting
- Fund managementFund Management
Designing a Phantom Option Plan for an NBFC
Welcome back to the latest edition of Fables of ESOPs. As we step into November, this month has witnessed a notable surge in Employee Stock Ownership Plans (ESOPs), with several industry leaders announcing new initiatives or expanding existing ones.
IdeaForge, Mphasis, KFin, Paytm, AppsForBharat, Delhivery, Nykaa, and Swiggy IPO have made headlines by allocating new equity shares and enhancing their ESOP pools. This trend underscores a growing commitment to employee empowerment and wealth creation within the startup ecosystem.
A recent survey indicates that employee stock option plans (ESOPs) are gaining traction among startup founders, with 78% of the 160 startups surveyed in 2024 offering these plans to their employees, a notable increase from 59% in 2021. The study highlights that a growing number of startups are extending ESOPs to all employees rather than limiting them to senior management. Currently, one-third of startups provide these plans to every employee, an increase from one-quarter in 2021.
Furthermore, discussions about ESOPs during interviews or job offers have risen to 90% among founders, compared to 75% in 2021. The median size of ESOP pools has also expanded from 9% in 2021 to 12.6% in 2024.
Drone manufacturer ideaForge has increased its employee stock option plan (ESOP) pool by allotting 2,608 equity shares under its ESOP 2018 scheme, as announced in an exchange filing on November 11. The shares, with a face value of Rs. 10 each, will rank equally with existing shares. This follows previous allotments of 1,450 shares in October and 3,936 shares in September. Despite a consolidated net loss of Rs. 13.7 crore in Q2 FY25, the company reported a 56.52% year-on-year increase in operating revenue to Rs. 37.1 crore.
Mphasis has granted 25,000 stock options under its Employee Stock Option Plan 2016 (ESOP 2016), priced at Rs. 2,900 each, vesting equally over five years with a 60-month exercise period. Additionally, the company allocated 12,000 Restricted Stock Units (RSUs) under its RSU Plan 2021, with an exercise price of Rs. 10 and a progressive vesting schedule of 10%, 20%, 30%, and 30% over five years. The RSU plan applies to both Indian and US-based employees, adhering to US Internal Revenue Code regulations.
KFin Technologies has allocated 2,72,146 equity shares under its Employee Stock Option Plan 2020, increasing the company's paid-up equity share capital from Rs. 171.46 crore to Rs. 171.73 crore. Each share has a face value of Rs. 10.
Paytm's parent company, One97 Communications Limited, has granted 4,05,190 equity shares to employees as part of its Employee Stock Option Scheme 2019, approved by the board on November 7, 2024. This allotment raises the company's issued and paid-up equity share capital to Rs. 63.71 crore. The announcement coincides with a 4.5% rise in Paytm's stock price, which is currently trading at Rs. 831.40 per share, bringing its market capitalization to Rs. 52,976.16 crore.
Head Digital Works has successfully concluded its inaugural employee stock options (ESOP) buyback program, with 97% of eligible ESOP holders opting to sell part of their vested options. Nearly half of the company's workforce, over 500 employees, benefited from the buyback, totaling $3 million. CEO Deepak Gullapalli emphasized the initiative's significance in rewarding employee dedication amid industry challenges and highlighted the company's commitment to long-term wealth creation.
AppsForBharat, the parent company of the devotional platform Sri Mandir, has announced its first Employee Stock Ownership Plan (ESOP) buyback worth Rs. 2.1 crore. This initiative will allow 25 employees to cash out a portion of their vested stock options. The buyback is facilitated through a partnership with Infinyte Club, aimed at rewarding dedicated team members who have contributed significantly to the company's growth.
Delhivery has allotted 11,21,541 stock options to eligible employees under three employee stock option plans (ESOP), as disclosed in an exchange filing on November 8. Each option converts into one fully paid-up equity share with a face value of Rs. 1. The allocation includes 1,87,641 shares under ESOP 2012, 7,56,000 shares under ESOP II 2020, and 1,77,900 shares under ESOP III 2020. This issuance raises Delhivery's paid-up capital from Rs. 74.09 crore to Rs. 74.20 crore, with the total value of the new shares estimated at Rs. 38.8 crore based on the stock's closing price of Rs. 346.50.
Nykaa has issued 1.80 lakh equity shares to employees under its Employee Stock Option Plan (ESOP). This announcement follows a 66.3% increase in the company's consolidated net profit for Q2 FY25, reaching Rs. 12.97 crore, up from Rs. 7.8 crore in the same period last year. While Nykaa has not disclosed changes in its paid-up capital, it reported an employee benefit expense of Rs. 161.49 crore for Q2 FY25, an 18.5% rise from Rs. 136.32 crore the previous year.
Delhivery's Nomination and Remuneration Committee has approved the grant of 4,90,000 stock options to eligible employees under the Delhivery Employees Stock Option Plan 2012 (ESOP-2012). The options will vest in three phases: 20% after 12 months, 30% after 24 months, and the remaining 50% after 36 months. Each stock option is convertible into one fully paid-up equity share with a face value of Rs. 1.
Swiggy's much-anticipated IPO of Rs. 11,327 crore created a buzz among investors and employees alike, especially with the recent unlocking of employee stock option plans (ESOPs) valued at Rs. 9,000 crore on November 13. This initiative enabled around 500 employees to achieve 'crorepati' status, each receiving a minimum of Rs. 1 crore, while 70 individuals were set to gain over Rs. 8.5 crore each, as reported by MoneyControl. The ESOPs allowed employees to acquire shares at a reduced cost as part of their compensation, with their value increasing based on the length of service with the company.
On November 13, 2024, Yes Bank allocated 14,86,408 equity shares under its employee stock option plan (ESOP). This allotment raised the bank's paid-up share capital from Rs. 62,69,67,99,314 to Rs. 62,69,97,72,130, increasing the total number of equity shares from 31,34,83,99,657 to 31,34,98,86,065, with each share having a face value of Rs. 2.
