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PhonePe to undertake ESOP buyback worth Rs 135 crore, founders to not participate in offer –

PhonePe’s top leadership can sell up to 10 percent of their vested stock and all other current employees can sell up to 25 percent of their vested. (Image: ShutterStock)

Digital payments and financial services company PhonePe said on November 19 that it will buy back shares worth Rs 135 crore in a bid to retain employees amid the continuing talent war and to offer more liquidity to employees.

1,900 of the company’s 2,500 employees who have completed a year of their stock vesting since the PhonePe employee stock options plan (ESOPs) announced last year will be eligible for the buyback.

The Flipkart-owned company said that the buyback offer will follow a three-tier model based on seniority. The company’s founders Sameer Nigam, Rahul Chari and Burzin Engineer will not be participating in the buyback, so the Rs 135 crore pool will be fully reserved for employees.

The top leadership can sell up to 10 percent of their vested stock and all other current middle and junior level employees can sell up to 25 percent of their vested.

Manmeet Sandhu, Head of HR at PhonePe said, “Last December, we had launched a new PhonePe ESOPs plan and issued ESOPs to 100 percent of our employees across levels, functions and grades. All these employees will complete the one-year cliff of their stock vesting next month, so it’s a great time to offer some liquidity to everyone.”

In December 2020, PhonePe launched its ESOPs program where it allotted ESOPs to all its employees starting at a minimum of Rs 3.5 lakh, cumulatively worth Rs 1,500 crores.

“Almost 75 percent of our current workforce is eligible to participate in the current buyback offer, and for most, it’s the first time in their careers that they’ve either owned ESOPs or had a chance to liquidate them,” Sandhu added.

The past year has seen PhonePe emerge as a leader in Unified Interface Payments (UPI), crossing Google Pay. The company saw a 44 percent drop in losses led by an 85 percent jump in revenues for FY21.

PhonePe‘s announcement comes at a time when a slew of startups have announced ESOP buybacks for their employees. The number of companies announcing buybacks has picked pace since last year with startups like Acko, Cred, Swiggy, Zetwerk, Licious, Zerodha among others adding to the pool.

These buyback programs also help companies retain and attract talent at a time when tech hiring activity is at a never seen before peak and retaining employees in the current market scenario is turning out to be a difficult task.

The latest announcement had come from Kunal Shah-led CRED, on November 8, saying that its cumulative ESOP buyback for the year will be up to Rs 100 crore.

Food delivery platform Swiggy too rolled out a two-year ESOP liquidity program worth $35-40 million in October this year. Swiggy had said that all employees holding ESOPs will be eligible to participate in two liquidity events in 2022 and 2023.