The allocation of 7.8 lakh equity shares for the exercise of vested options under its employee stock option plan (ESOP) has been approved by logistics giant Delhivery. In an exchange filing, Delhivery Limited stated that on December 10, 2024, the stakeholders’ relationship committee authorised the issuance of 7,84,927 equity shares with a face value of INR 1 each, fully paid up against the execution of vested options. The allocation of these shares was made under ESOP 2012 for 1.96 lakh shares, ESOP II 2020 for 1.2 lakh shares, and ESOP III 2020 for the remaining 4.6 lakh shares.
The firm has fixed the exercise price for 96,350 stock options under ESOP 2012 at INR 29.85, 1,915 stock options at INR 16.28, 95,882 stock options at INR 1, and the remaining 2,200 stock options at INR 0.1. The exercise price for all stock options under ESOP II 2020 and ESOP III 2020 is INR 0.10.
Marginal Increase in Paid-Up Capital
The startup’s paid-up capital climbed slightly to INR 74.3 Cr from INR 74.2 Cr after these shares were allocated. Delhivery‘s stock was down 0.67% from its previous closing of INR 380.85 at 1:26 PM, trading at INR 378.30. This occurs at a time when Delhivery recently added 20,000 new stock options to the pool size of its ESOP 2012. The business also distributed 8.6 lakh equity shares under its ESOPs a few months ago.
Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati founded Delhivery, a logistics, supply chain, and transportation firm, in 2011. Amazon Shipping, Flipkart‘s Ekart Logistics, Blue Dart, and Xpressbees are some of the competitors of the logistics powerhouse.
Notably, Delhivery approved the allocation of 6,15,930 equity shares with a face value of INR 1 just one month prior to the current ESOP expansion. In addition, on September 2, it granted 63,538 stock options to qualified workers.
Current Financial Dynamics
Anindya Ghose, a non-executive independent director of Delhivery, resigned last week, citing a number of personal obligations. Additionally, the startup intends to intensify its focus on speedier delivery services by establishing a network of multi-tenant dark stores that would offer e-commerce businesses swift delivery. Compared to a loss of INR 102.9 Cr in the same quarter last year, Delhivery reported a consolidated net profit of INR 10.2 Cr in the second quarter of FY25. In the quarter under review, service revenue increased 13% to INR 2,189.7 Cr from INR 1,941.7 Cr in the same period last year.
One97 Communications, the parent company of Paytm, has distributed 2.44 lakh equity shares to qualified workers through its different employee stock ownership programmes (ESOPs). During its meeting on December 5, 2024, the company’s nomination and remuneration committee approved the distribution of 244,801 equity shares with a face value of INR 1 each, fully paid up, to eligible employees upon exercise of vested options, according to a filing made by Paytm. Of these, 2,006 shares were distributed under ESOP 2008, while 242,795 shares were awarded under the ESOP 2019 programme. The company’s issued and paid-up equity share capital has increased from INR 63.71 Cr to INR 63.73 Cr (or INR 63,73,82,630 to be exact) as a result of this allocation. The newly allotted shares are worth INR 23.41 Cr based on the stock’s most recent closing price on 5 December 2024.
Giving ESOPs in Massive Capacities
Paytm has been giving out ESOPs in large quantities at the moment. The fintech giant gave its staff members 4 lakh stock options in November. Before that, in October, it granted 4.81 lakh stock options, increasing the size of its ESOP pool. Shares of Paytm have been rising recently. Several broking firms praised the company for reducing losses and increasing income, and a few days ago, the stock reached a new 52-week high of INR 951.90 per share.
Bernstein also boosted its price objective for Paytm from INR 750 per share to INR 1,000, while UBS lifted its price goal from INR 490 per share to INR 1,000. Paytm has unveiled UPI Lite, a new Unified Payments Interface (UPI) product that enables users to set up pin-free automated top-ups for daily payments under INR 500.
Current Financial Dynamics of Paytm
In contrast to the INR 292 Cr loss reported in the same period last year, Paytm declared a consolidated profit after tax (PAT) of INR 930 Cr in the September quarter (Q2) of the fiscal year ending March 2025 (FY25). However, a one-time exceptional gain of INR 1,345 Cr from the sale of its entertainment ticketing business was the reason for the profit. From INR 2,519 Cr in Q2 FY24 to INR 1,660 Cr during the quarter, revenue from operations fell 34% year over year (YoY). On December 5, Paytm’s stock ended the day 1.8% higher on the BSE at INR 956.5.
ESOP’s Popularity is Rising in India’s Startup Sector
As part of their initiatives to reward staff, several modern internet businesses have issued ESOPs this year, including Delhivery, Nykaa, ixigo, and ideaForge, among others. The travel tech business ixigo gave 17.57 lakh stock options last month, while logistics giant Delhivery increased its ESOP pool by allocating 73K stock options. Only a few days after raising INR 8,500 Cr through the placement of eligible institutions—its first significant fundraising effort since its 2021 IPO—Zomato announced its ESOP.
The Foodie Bay Employees ESOP Trust, an employee welfare trust established by the foodtech company, has received 47.75 Cr equity shares from Zomato under various employee stock option programmes (ESOPs). The Deepinder Goyal-led firm announced in an exchange statement on December 2, that its board had authorised the issuance and distribution of 47.75 Cr equity shares under the Zomato ESOP 2018, ESOP 2021, ESOP 2022, and ESOP 2024 schemes, each with a face value of INR 1.
The newly allocated shares are valued at INR 13,489.3 Cr (about $1.60 Bn) based on the stock’s most recent close. According to the filing, the company’s issued, subscribed, and paid-up equity share capital grew from INR 917.28 Cr to INR 965.03 Cr with the allocation of new equity shares to Foodie Bay Employees ESOP Trust.
Strengthening the Cash Balance to Remain Ahead in the Race
CEO Deepinder Goyal stated that Zomato needed to improve its cash balance because of the current competitive environment and the company’s much larger scale. It is anticipated that Zomato’s financial stability may suffer in the near future as a result of the growth of Blinkit, its rapid commerce division. This was made clear by Zomato’s Q2 FY25 results, which showed a 30% sequential drop in net profit to INR 176 Cr for the foodtech company. This was mostly caused by higher costs associated with Blinkit’s expansion drive. Strong performance across its meal delivery and quick commerce sectors drove a 14% quarter-over-quarter increase in operating revenue to INR 4,799 Cr in Q2 FY24.
ESOP Getting More Popular Among Startups
As part of their initiatives to reward staff, several modern internet businesses have issued ESOPs this year, including Delhivery, Nykaa, ixigo, and ideaForge, among others. The travel tech business ixigo gave 17.57 lakh stock options last month, while logistics giant Delhivery increased its ESOP pool by allocating 73K stock options. Only a few days after raising INR 8,500 Cr through the placement of eligible institutions—its first significant fundraising effort since its 2021 IPO—Zomato announced its ESOP.
Furthermore, the median ESOP pool size grew from 9% in 2021 to 12.6% in 2024, and 90% of founders now talk about ESOPs with candidates during interviews or job offers, up from 75% in 2021. Additionally, the reasons for providing ESOPs have changed; in 2024, 40% of founders cited cost reductions, up from 28% in 2021. The founders cited the necessity to retain people as the second most important reason for putting these plans into action, behind creating a sense of ownership and company culture.
Even with this increase, fewer than 30% of founders still fully understand the complexity of ESOPs, a percentage that hasn’t changed since 2021. Just 14% of founders felt educated about the tax consequences of ESOPs, which is a fairly low level of understanding.
The first-ever employee stock option plan (ESOP) buyback has been accomplished by SaaS marketplace NowPurchase. The business’s founder and CEO, Naman Shah, told the media that 40 of its employees opted to cash out some of their vested stock options in the company through this repurchase option, while the remaining employees decided to keep their shares.
The business claimed that the buyback was worth about 100 times the original acquisition price, despite not disclosing the ESOP’s financial details. In July 2019, the ESOP programme was first introduced.
How NowPurchase Operates?
NowPurchase, which was founded in 2017 by Naman and Aakash Shah, helps metal manufacturers by obtaining raw materials through its metal cloud platform and scrap recycling services. Additionally, it offers its consumers a staff to provide on-site service and quality assurance, a proprietary SaaS platform to improve their production process, and a WhatsApp bot to find prices and stock in real time.
The ESOP buyback, according to a statement from NowPurchase, is an example of the company’s dedication to creating a top-tier workforce that benefits from their labour and holds significant stock in the business. The company’s dedication to growth and value creation for everybody is demonstrated by the fact that this buyback includes workers from all functional areas, including warehouse personnel, prospective CXOs, and everyone in between. According to Naman Shah, this would not have been feasible without the backing of Orios & InfoEdge, the brand’s initial institutional investors.
Company’s Funding Rounds and Expansion
The Kolkata-based business earlier collected $6 million (about INR 50 crore) in September from a variety of investors in the form of debt and equity injection. The new funds were used to expand and implement innovative solutions that would better serve the metal production sector. In light of this, Shah has now stated that activities in the states of Tamil Nadu, Rajasthan, and Punjab will be operational by the end of this month.
Current ESOP Scenario in India
This year, about 20 Indian businesses have launched ESOP buybacks, giving their staff members a chance to increase their income. For example, earlier this month, AppsForBharat, a Bengaluru-based startup, launched its first employee stock ownership plan (ESOP) repurchase programme valued at approximately INR 2.1 Cr, allowing 25 employees to cash out their company stock options.
Additionally, the first repurchase option for Adda247, an edtech business sponsored by Google, was disclosed in July and benefited at least 130 employees in a variety of jobs and tasks. In addition, the 153 team members of the agritech firm DeHaat, which was supported by Peak XV, benefited from the completion of its first-ever employee stock ownership plan (ESOP) buyback programme in June, which was worth INR 10 Cr.
Under its Employee Stock Option Scheme (ESOP) 2021, PB Fintech, the parent company of the well-known insurtech company Policybazaar, has distributed about 27 lakh equity shares. On November 15, PB Fintech said in an exchange filing that its board has given its authority to distribute 27,85,962 equity shares to qualified employees under the 2021 plan. The company’s issued and paid-up share capital, after these shares are allocated, is INR 91,77,91,852, which is made up of 45,88,95,926 equity shares with a face value of INR 2 apiece.
After qualified workers exercised their vested options under the PB Fintech Workers Stock Option Plan 2021, the Nomination and Remuneration Committee awarded them 27,85,962 equity shares with a face value of INR 2 apiece, the document stated.
Stats Prior to Allotment
The issued and paid-up share capital of PB Fintech, which included 45,61,09,964 equity shares, was INR 91,22,19,928 prior to share allocation. On the BSE, shares of PB Fintech ended the most recent trading session at INR 1725.15 each. According to the stock’s 15 November closing price, the freshly allotted equity shares are valued at INR 480 Cr. This follows the company’s distribution of 75,760 equity shares under the same ESOP Plan to qualified employees. Under its ESOP plan 2021, PB Fintech distributed 48.3 lakh equity shares earlier in June.
Current Financial Report of PB Fintech
In the second quarter (Q2) of the fiscal year 2024–25 (FY25), it posted a quarterly profit of INR 50.98 Cr, its fourth consecutive quarter. Yashish Dahiya, the company’s chairman and Group CEO, acknowledged earlier in September that the business is thinking about entering the healthcare industry. According to reports, PB Fintech is expected to obtain board permission before making a one-time investment of $100 million to purchase a 30% interest in a new healthcare company.
Current ESOP Scenario in India
According to a 2024 survey of 160 companies, 78% of them offered employee stock option plans (ESOPs) to their staff, a considerable increase from 59% in 2021. This indicates that ESOPs are becoming more and more popular among startup owners. More firms are now offering ESOPs to all employees, not only senior management, according to a survey done by Saison Capital, XA Network, and Carta. Compared to one in four in 2021, one in three firms now provides these plans to all employees.
Furthermore, the median ESOP pool size grew from 9% in 2021 to 12.6% in 2024, and 90% of founders now talk about ESOPs with candidates during interviews or job offers, up from 75% in 2021. Additionally, the reasons for providing ESOPs have changed; in 2024, 40% of founders cited cost reductions, up from 28% in 2021.
The founders cited the necessity to retain people as the second most important reason for putting these plans into action, behind creating a sense of ownership and company culture. Even with this increase, fewer than 30% of founders still fully understand the complexity of ESOPs, a percentage that hasn’t changed since 2021.
Running a company is always challenging, with all the tasks that need to be done. You need a motivated, loyal, and productive workforce to help maximize the company’s resources and output. However, motivating and retaining great employees can challenging, considering the salaries and other benefits that you have to provide them in exchange for their services. This is where an Employee Share Option Plan (ESOP) comes into play.
If this is the first time that you’ve heard of this concept, no worries. This article summarizes what ESOP is and how it can help business owners like you.
Simply put, an Employee Share Option Plan or ESOP is when a company offers its employees the option to buy a specific number of shares in the company, at a specified price that is typically lower than the market price, within a particular date.
In other words, this is an employee share option that allows employees to have an ownership interest in the company they’re working for. There are two types of share options that can be offered:
Incentive Stock Option (ISO) – This type of option allows an employee to get rid of taxes on the shares they own until the shares are sold. After getting the option grant, they will hold the stock for at least two years, and after a year of exercising the option, they can be eligible for a long-term 20% capital gains tax. This option is not transferable to anyone, even within the family.
Non-Qualified Stock Option (NSO) – This type of share option requires an employee to pay an income tax on the difference between the price at which you avail of the option and the grant price. Furthermore, the employer can agree if the employee wants to transfer the shares to the employee’s offspring.
Benefits of an Employee Share Option Plans for the Companies
With that general idea of what ESOP is, if you now want to know how an employee share option benefits your company, then the four (4) most common benefits of granting an Employee Share Option Plan to your workforce are summarized here:
Attract and Retain Talented Employees
Hiring and keeping talented employees is never easy and this is more of a truth in today’s world, where companies and startups abound. With the fierce competition in the business world, companies are competing with one another to get the staff they want for their company. Aside from attracting the best applicants, offering employee share option plans can also motivate workers to give their best, knowing that their output affects their shares.
Ideally, with an employee benefit plan such as ESOP in place, applicants will be attracted to join the company while current employees will be inspired to work and stay longer. Considering the fact that they have an ownership interest in the company, they will tend to be more loyal and committed to their job and for a longer period of time. As a result, your organization will be more productive and prosperous today and in the coming years as your employees work together in helping the company grow.
Boost Employee Morale
Having shares in the company in which they’re working can help boost the employees’ morale. Instead of seeing themselves as salaried personnel, they’ll feel like they’re owners of the organization and that they have a say over important aspects. They’ll become more inspired and committed to the best interests of the company considering that one of the benefits of availing of the ESOP is that they will get a share of the company’s profits in the form of dividends.
Cost-Effective
As mentioned, most companies are looking for ways to reduce the costs of employee benefits, searching for less-cost solutions that offer high value for their staff. This is how offering ESOP becomes an ideal addition to employee benefits.
Although these share option plans for employees are rarely considered as an alternative for compensation, they’re still a good part of your company’s benefits packages because they can make employment opportunities in your company more appealing.
Despite the lost chance to sell the shares at the best market price and the cost of executing the plan, you can still get the most out of this benefit option by keeping staff motivated and loyal to stay with the company.
If you’re a small business owner, administering ESOP can be a cost-effective way of competing with more prominent corporations in your area.
Offers Tax Advantages
Including employee share option plans in your employees’ benefits program comes with some tax benefits too for your business. Generally, not until they’re exercised, ESOPs are considered worthless on your company’s book of accounts. This means that you’re not required to list down these options pending as a cost.
Moreover, once the employees exercise their options, your organization is authorized to deduct a tax equivalent to the difference between the market price and the strike price (fixed price at which the owner can buy the shares) as compensation expense.
Some other advantages of ESOPs or employee stock ownership plans for the companies can be summed up as:
ESOPs helps boost productivity
They save companies from immediate cash outflow
They help ageing owners to exit from the company
ESOPs help reshuffle ownership
They enhance employee retention
They help companies attract new employees
They are excellent for startups and companies operating in a low to moderate budget
The employee share option schemes also helps increase the intrinsic value of the cmpany
ESOP Benefits to Employees
ESOPs certainly help the companies and startups grow in ways more than one but not without benefitting the employees. After all, it is centring the employees that the concept of ESOPs are built. According to the recent survey conducted towards the end of 2021, it has been discovered that the employees working with startups have made more than $335 mn solely with the help of employee stock option strategies.
Thus, ESOPs definitely help the employees to a great extent. So, let’s have a glimpse into how the employee option plan for stocks prove to be a boon for the employees themselves:
ESOPs help enhances the job security of the employees
Startup ESOPs extend retirement benefits
ESOP in startups improves the employees’ overall commitment to work
Share option plans make the employees wealthy
ESOP benefits the employees by boosting their professional growth
Company Share Option Plans and the Indian Companies
Company share option plans are growing more than ever all around the world. Therefore, the Indian markets are not an exception to it. The Indian ecosystem has seen around 44 companies turning unicorn in 2021. Acording to the reports dated December 2021, the Indian startups have raised a total of $39 Bn till the first week of December, which is an increase of around 225% from $11.8 Bn in 2020. All these fundings are also enabling a huge growth for the startup companies and an outstanding era of growth and innovation for the country as well. Along with the funding it usually boils down to the employees that companies have as far as growth is concerned. It is the talent that a company nurtures, which helps distinguish a great performing company to an average performing or a low-performing company. Here, implementing overwhelming employee stock option strategies comes in extremely handy to boost the employees. While the companies can certainly resort to giving cash bonus, freebies, week offs or gifts to their employees to motivate them, the ultimate motivation comes in with the administration of lucrative share option schemes as offers that the employees simply cannot refuse.
ESOPs are not only growing in numbers but also expanding in terms of the size. If you are now more curious to learn about the major Indian companies that have been promising decent employee stock options for the empoyees, then let’s have a quick rundown along the best ESOP buybacks that the Indian companies has seen in 2021.
Well, Flipkart leads the Indian companies with the biggest ESOP buyback amount of $125 mn. The Walmart-led company has been succeeded by:
Browserstack – $50 mn
Swiggy – $40 mn
UpGrad – $29.5 mn
Zerodha – $27 mn
Udaan – $23 mn
Sharechat – $19 mn
Phonepe – $18 mn
CRED – $19.3 mn
Spinny – $12 mn
HealthifyMe – $12 mn
Unacademy – $10.5 mn
Chalo – $10 mn
Khatabook – $10 mn
Razorpay – $10 mn
Zetwerk – $8.3 mn
Urban Company – $7.3 mn
Simplilearn – $6.4 mn
Meesho – $5.5 mn
Takeaways
As you can see, ESOPs can be a perfect tool for businesses that are looking to attract the best talents, and for those who want their business to grow and succeed. For your convenience, this article summarizes information for you to know when you should consider ESOP for your business and more importantly, to convince people about the growth potential of your company.
FAQs
What is an employee share scheme?
An Employee Share Option Plan is when a company offers its employees the option to buy a specific number of shares in the company, at a specified price that is typically lower than the market price, within a particular date.
What are the pros of offering employee stock options?
ESOP acts as a tool of motivation for the employees that once they own a stock they feel responsible for the performance of the company, as it determines the value of the stocks of the company.
It helps the employer to retain the company and assure a good level of performance in the work.
How do I avoid tax on ESOP?
To avoid paying taxes and potential penalties consider a rollover for your ESOP distribution. The rollover process takes place when tax-deferred funds from your ESOP are transferred to another tax deferred account such as an IRA or 401(k).
How ESOP is taxed?
The shares is short-term when held for less than 3 years and long-term when sold after 3 years. The period of holding begins from the exercise date up to the date of sale.
What is the full form of ESOP?
The full form of ESOP is an employee share 0ption plan.
Revolut is a UK-based Fintech company that provides banking services to its client. The company was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. The services they provide include currency exchange, credit card, and debit cards. With time the evaluation of this company has grown manifold. It has benefitted its shareholders immensely. But not only that it has managed to make 70 of its employee into a millionaire. So, let’s look at how Revolut turned 70 employees into millionaires.
Revolut is a fintech company based in London, founded by two Russian entrepreneurs Nikolay Storonsky and Vlad Yatsenko. This company provides various banking financial services to its customers. The prominent services they provide are debit cards, credit cards, and virtual cards. They have also started providing services in free stock trading, crypto, etc.
Recently it has started expanding in Japan in the year 2020. In the same year, they increased their employees from 1500 to 5000. It is now one of the most valuable companies in Britain. Today it is the fastest-growing fintech startup.
How Did Revolut Help 70 Employees Turn Into Millionaires?
Revolut has been giving services of credit cards, debit cards, and many other banking services. With time, it has grown more and more. It also provides quality services.
Being a fintech company with smart products, it has successfully acquired the whole market. In due course of time, they have provided profit to their shareholders and also provided ESOP to their employees.
Implemented Shrewd Business Model
They grew quickly within a single year. As many as 10,000 users registered with them. Till now because of their shrewd business method they have made 70 of their employees into millionaires. In the initial days, the company had given its employees a good percentage of ESOP. This was done to encourage them to work harder and they too would become rich with the company.
Issued ESOP To Its Employees
With time, the company grew and it not only paid its actual shareholders but also made its employees rich as well. A lot of new employees also joined and have also opted for ESOP. This is why there might be more employees who turn out to be millionaires.
But all these things are on paper only. It is not so easy to sell these shares. Revolut is not yet listed on any stock exchange. This is why it is not so easy to monetize them.
At present, the company is allowing its employees to only take out parts of their shares. In reality, the employees have to sell their shares at a discounted price. But even in this case, it is making them rich.
The Revolut Share Sale Controversy
Revolut has issued shares to its employees when they joined the company. Now when the company has grown, the company has allowed their employees to sell some amount of their shares.
To be specific, they have allowed their employees to sell 20% of their shares and allowed their former employees to dilute 10% of their shares. But it is not as simple as it looks. To monetize their shares, they need the help of a special agent.
They also have to sell their shares at a discounted price than the original one. If they want to take the help of an agent, then fees will also be charged from them. This is why they have to pay extra money to sell their shares. This is causing a lot of discontentment among its employees. Many of the employees complained that the shares were not getting sold. Others complained about the discounted price.
But in reality, these things are completely justifiable. First of all, it is a big luxury for people to sell shares of a new company. This is why it is completely fine to do it this way. Though they have to sell their shares at a discounted price the amount of money they’ll receive is huge.
In the year, 2020 when the company was facing some slowdown due to the pandemic, they fired many employees. It was said that Revolut forced their employees to either resign on their own or they would fire them.
This was the case study on how Revolut helped 70 employees turn into millionaires. If you are an entrepreneur, you can implement these learnings in your startups as well. Hope these learnings will help you grow your startup to new heights.
FAQs
What is Revolut?
Revolut is a fintech company that provides various banking financial services to its customers. The prominent services they provide are debit cards, credit cards, and virtual cards. They have also started providing services in free stock trading, crypto, etc.
How many employees does Revolut have?
Revolut currently has a workforce of over 3000 employees.
How Did Revolut Turn 70 Employees Into Millionaires?
Revolut made over 70 employees into millionaires by implementing a shrewd business model in the organization. They also had an entrepreneurial culture that made their employees strive to be millionaires and work hard. They also gave their employees ESOP that they turned into millionaires.
Nitin Konde
