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Paytm, Zomato top brass rewarded with hundreds of crores of ESOP payouts in H1FY23

Top managers of Paytm got ESOPs worth Rs 564 crore in H1, those of Zomato got ESOPs worth around Rs 380 crore

November 25, 2022 / 05:49 PM IST
(Representative image)

(Representative image)

New-age companies Paytm and Zomato have recorded share-based payments  worth hundreds of crores each for their top management in the first half of FY23, according to related party transaction disclosures.

For Paytm, employee stock option (ESOP) expenses due to key managerial personnel (KMPs), relatives of KMPs and directors was Rs 564 crore in the six months ending September (H1). The company also recorded salaries, bonuses and incentives worth Rs 5.2 crore for KMPs during the period.

In a regulatory filing, Zomato has disclosed that it recorded Rs 380 crore of such expenses towards KMPs in the first half of FY23.

While Zomato recorded a net loss of Rs 435 crore in H1, the figure was Rs 1,217 crore for Paytm.

At a time when new-age companies like Paytm, Zomato, Policybazaar and Delhivery have struggled to show a clear path to profitability, market observers and analysts are sceptical of large ESOP grants to the top brass. More often than not, founders turn out to be the biggest beneficiaries of such dole-outs.

Paytm shares are currently trading at Rs 465 apiece, down 73 percent from its initial public offer issue price of Rs 2,150 apiece in November last year. Zomato shares are currently trading at Rs 64 apiece, down 16 percent from its IPO issue price of Rs 76 apiece.

Moneycontrol had earlier reported that Paytm saw its ESOP expenses on account of KMPs, including CEO and managing director Vijay Shekhar Sharma and CFO Madhur Deora, surge 50 times to Rs 567 crore in FY22, up from Rs 11.2 crore in the previous financial year.

This 4,963 percent rise in stock compensation has coincided with a massive hit to the stock after the Noida-based fintech went public in November 2021 at a valuation of around $20 billion.

Zomato’s employee benefit expenses increased by Rs 890 crore in FY22 primarily due to increase in the ESOP expenses by Rs 740 crore. In FY22, the company had granted 368,500,000 ESOPs to the Managing Director and Chief Executive Officer Deepinder Goyal, having an aggregate fair value of Rs 1,370 crore, that will vest over a period of 6 years based on certain time and performance conditions.

The cost recorded for these ESOP’s in FY22 amounted to Rs 750 crore.
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Deepsekhar Choudhury Deepsekhar covers tech and startups at Moneycontrol. Tweets at @deepsekharc
first published: Nov 25, 2022 04:51 pm