Paytm Helps Employees Exercise Stock Options
- ByAyushi Ray | August 16, 2021
Paytm helps employees exercise stock options. One97 Communications Ltd which is the parent company of payments services provider Paytm, is in talks with five lenders to help employees borrow money to exercise their stock options before the company’s much-awaited initial public offering happens. Paytm wants to help employees pay for buying their vested options and make tax payments if required, the people said, requesting anonymity. Stock options are taxed as a perquisite when the employee exercises the option to buy the stocks. The exercise price is the amount the employee pays to buy the vested options. The difference between the fair market value of the shares on the date of exercising the options and the amount paid to exercise the option is taxed based on the salary bracket slab of the employee.
“Paytm (One97) is in talks with financing institutions such as IIFL, ICICI Bank and Edelweiss Capital to help its employees convert their employee stock ownership plans into shares and provide them loans to pay for exercise price and tax payments. These loans are expected to be of the duration of 12 months,” revealed by a close source. It is expected to fetch a loan size of around ₹100 crore towards this end therefore helping 300-500 employees who can hold stock options. The One97 management is also in talks to absorb the interest costs of the loans being provided to employees. The final names of the lenders and total credit size is expected to be decided this week. Lenders which include Edelweiss-backed ECL Finance Ltd and ICICI Bank, will provide these loans to customers to exercise their stock options.
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