PhonePe launches $200M ESOPs for all full-time employees

Fintech major PhonePe said in a blog it has launched a $200 million stock option plan for its 2,200 full-time employees, enabling everyone to benefit from the growth it saw last year when digital payments hit new highs due to the pandemic.

PhonePe ESOP follows a string of several other startups such as Licious, Wakefit, and ShareChat that recently granted stock options to all their employees in an attempt to involve them in the growth plan and success of the organisation more closely.

Flipkart-owned PhonePe said it will use the ESOPs to create incentives for its employees to stay invested in the organisation's long-term growth. A minimum of $5000-worth of ESOPs will be allocated for all levels.

For more senior roles, ESOPs will be part of the employees' annual compensation, which the startup hopes will encourage everyone to "put the organisation first."

"We are committed to building an internal culture based on inclusion and an abundance mentality, where every interaction is a positive-sum game," the startup's blog post read.

"As the organisation generates more value, it translates into more benefits for every employee. There is more for everyone, removing the need for internal competition," it added.

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In April last year, PhonePe's competitor Paytm had announced a Rs 250 crore ESOP policy that would reward employees on the basis of their overall performance and the achievement of annual targets.

Traditionally a wealth creation tool used by startups to retain top talent and offer incentives to senior executives, ESOPs have now become a way for companies to compensate employees in lieu of appraisals, and amid salary cuts, furloughs, and hits to the bottom line due to the COVID-19 pandemic.

PhonePe, which was recently hived off from its parent company and ecommerce major Flipkart, had said the divestiture would give it more autonomy in terms of being able to offer equity incentives to its employees, as well as choose its own board.

In December, PhonePe said Flipkart co-founder Binny Bansal was slated to join its board, along with Sameer Nigam and Rahul Chari, who founded the payments processor.

The spin-off from Flipkart helped PhonePe raise $700 million at a post-money valuation of $5.5 billion.