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The concept of Esops has always been a hit with startups and is now also being explored by established entities. PhonePe was in the news recently when it offered Esops to all its employees with minimum allocation of Rs 3.63 lakh to each employee.

In an interview with Money9, Manmeet Sandhu, Chief People Officer, PhonePe, talks about how the equity culture will translate into increased wealth for everyone.

Edited excerpts:

Q: Can you share details about the Esops offered to your employees? Will the quantum be based on the level of seniority?

Sandhu: In January 2021, we launched the PhonePe Stock Option Plan that gives every PhonePe employee the chance to own a part of the company. The USD 200 Mn (Rs 1,456 crore) plan allotted stock options to all 2,200 employees at PhonePe, enabling everyone in the organisation to benefit from its success.

The minimum ESOPs allocation was $5000 (Rs 3.63 lakh). The allocation was based on factors such as role, tenure and performance of employees. By having ESOPs at a minimum of USD 5000 for all levels, we enable every employee in the organisation to participate in the wealth generation opportunity they have helped create. In more senior roles, ESOPs are a part of the annual compensation for employees, translating into a larger component of their compensation being tied to the organisation’s success.

Q: At what price ESOPs have been offered?

Sandhu: The current rate of each PhonePe Stock Option is based on the company’s current valuation of $5.5 billion. As we continue to grow and build a sustainable business, the value of the PhonePe stock options is likely to increase creating greater wealth for our employees.

Q: What is the age profile of your employees? Is the benefit going to be different for someone who is just starting a career compared with someone near retirement?

Sandhu: The majority of our employees are below 30 with 27 being the average age. Having said that, the ESOP allocation is considered valuable for employees regardless of their age or stage in career. The ESOP allocation is based on factors such as role, tenure, performance and is not dependent on the age of employees.

Q: Is there any lock-in and vesting period for employees opting for ESOPs?

Sandhu: Our stocks vest over a four-year period, with the initial 25% of the stocks vesting on completion of the first year of service. The remaining stocks vest in 36 equal installments over the subsequent 3 years.

Q: Generally, Esops are given to the top management and senior employees of the company. PhonePe in a big move has allotted Esops to all its employees. What is driving the thought process?

Sandhu: PhonePe is a people-driven company where the primary driver of success is the contribution and commitment of its people. We can only continue to grow and prosper if our employees see themselves as owners. They are not just doing a job, but are fully committed to driving long-term success for the organisation. This responsibility is not limited to a few people in senior management, but to everyone, including people who represent us in front of our customers, whether they be customer service agents or employees out in the field.

So, if we expect all our employees to act as owners, it is only right that we make them owners. The allotment of Esops to all full-time employees coincided with the completion of five years of PhonePe. We rolled out Esops to all our employees, whether they be software engineers, product managers, customer experience agents or on-ground sales agents, in January this year. The PhonePe Stock Option Plan was crafted to encourage collaboration, long-term focus and organization-first thinking. As we unlock value and expand the market, we expand the opportunity for everyone, creating a positive flywheel of success. The Esops option ensures that there is also an opportunity to generate wealth and be participants in PhonePe’s growth story for all employees.