Phonepe extends ~1,500-cr Esops to all 2,200 staffers

Walmart-owned digital payments firm Phonepe has distributed Esops (employee stock ownership plans) worth $200 million (about ~1,500 crore) among its 2,200 employees. This after the company recently raised $700 million in primary capital at a post-money valuation of $5.5 billion from the existing Flipkart investors, including Tiger Global, led by Walmart.

The allotment of Esops to all full-time employees also coincided with the completion of five years of Phonepe.

“We rolled out the compensation to all our employees, whether they be software engineers, product managers, customer experience agents, or on-ground sales agents, in January this year,” said Manmeet Sandhu, chief people officer, Phonepe.

The stock distribution was based on factors, such as role, tenure and performance, and crafted to encourage collaboration, long-term focus, and organisation-first thinking.

“The idea is — as we unlock value and expand the market, we expand the opportunity for everyone, creating a positive flywheel of success. Esops ensure that there is also an opportunity to generate wealth and be participants in Phonepe’s growth story for all employees,” said Sandhu.

By having Esops at a minimum of $5,000 for all levels, Phonepe said it was enabling every employee in the organisation to participate in the wealth generation opportunity they had helped create.

The stock grants at Phonepe were over and above regular increments. Increments for 2020 were in line with the market and not limited due to the stock grants, the company said.

Despite most of Phonepe’s employees working remotely, the digital payment firm has been able to turn the Covid-19 pandemic challenge into an opportunity.

Phonepe — which competes with players, such as Google Pay, Paytm and Amazon Pay — recently crossed the 250-million registered user milestone, with over 100 million monthly active users generating over 1 billion digital payment transactions in January alone. It is targeting to surpass 500-million registered users by December 2022.

E-commerce firm Flipkart recently did a partial spin-off of Phonepe, which should help it to access dedicated, longterm capital to fund its growth ambitions, including going public by 2023. One of the ambitions is to deepen its penetration into financial services, the size of which may touch $340 billion in the next few years. The aim is to provide financial inclusion to 1 billion Indians.

Phonepe is not the only start-up providing ESOPS to its employees despite the pandemic. Last year, Softbank and Facebook-backed edtech unicorn Unacademy said it would have an ESOPS buyback for its current and past employees. This was the second such liquidity event at the company founded about five years ago.

Swiggy also initiated an ESOP liquidity programme worth around $7-9 million for its existing employees and those who were laid off by the food delivery giant due to the impact of the Covid-19 pandemic.

Also, technology-enabled home services firm Urban Company had announced an employee stock sale programme worth $5 million. Under this programme, employees would be given the option to liquidate their vested ESOPS, which would be purchased through a secondary transaction by the existing investor Vy Capital. All existing employees with vested ESOPS are eligible to participate in the current sale programme.