Paytm revises ESOP framework, links future vesting more closely to performance, stock option pool remains unchanged

New Delhi, Aug 21 (IANS) The board of One 97 Communications, which operates mobile payments brand Paytm, has proposed changes to its employee stock option framework that would link future ESOP vesting more closely to performance, while keeping the overall stock option pool unchanged, reinforcing a greater focus on performance-based employee incentives.

According to One 97 Communications Limited’s 26th Annual General Meeting notice, the proposed amendments to the One 97 Employees Stock Option Scheme 2019 will require higher levels of performance for full vesting, with the number of options vesting to be determined on a graded basis. The changes are subject to shareholder approval through a special resolution.

Under the existing framework, employees receiving a performance rating of “Meets expectation” or a similar rating and above were eligible for 100 per cent of the options due for vesting on a particular date. Employees rated below that level were not eligible for vesting.

The revised approach introduces a broader assessment. The AGM notice states that ESOP vesting will be contingent upon a “holistic review” covering role-specific KRAs, business performance, company performance and the employee’s future potential, among other parameters.

Based on this review, employees will be assigned an ESOP rating that will determine how much of the eligible grant actually vests. Only employees with an ESOP rating of “Meets expectation” and above will qualify, with vesting ranging from 10 per cent to 100 per cent. The ESOP rating will be approved by the CEO.

The AGM notice states that the amended policy makes the framework “more stringent and performance-differentiated”, with full vesting dependent on “higher levels of performance” and vesting entitlements calibrated according to performance outcomes.

The change will apply only to future ESOP grants. Options that have already been granted under ESOP Scheme 2019 will continue under their existing terms, with no change in the rights and obligations of current option holders.

Paytm is not expanding its ESOP pool as part of the revision. The AGM notice says the amendments “do not result in any incremental dilution or increase in the maximum number of options that can be granted under ESOP Scheme 2019”.

As of the date of the AGM notice, 2.67 crore options were yet to be granted under the scheme, including options that may return to the pool because of lapse, surrender or other reasons. These are convertible into an equal number of equity shares of face value Rs 1 each.

The basic vesting period also remains unchanged. Future options may vest after a minimum of one year and within a maximum of five years from the grant date, as decided by the Nomination and Remuneration Committee. Continued employment will remain a condition for vesting.

Paytm said the amendments are also in line with the SEBI’s share-based employee benefits and listing regulations, and are aimed at strengthening the link between employee stock options, individual performance and long-term shareholder value.

–IANS

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