Institutional investors oppose generous ESOPs at listed startups

22 Aug 2022 , 09:44 AM

Institutional investors, particularly foreign funds, are opposed to plans by publicly traded new age companies to provide some of their best staff with generous stock options and compensation packages. Investors are raising a red flag about these stock option issuances, according to people with direct knowledge of the situation, because the prices are much below those of the present market.
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Investors rejected a plan for Employee Stock Options (ESOPs) put out by the company late last month by an 82% margin.
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Institutional investors rejected the reward recommendations for founder Vijay Shekar Sharma and chief financial officer Madhur Deora in the instance of Paytm’s parent firm One97 Communications NSE 2.16%. Approximately 76% of institutional investors opposed Sharma’s proposed compensation during the shareholder meeting, even though the majority of investors accepted the reappointment of two directors, including Sharma. In a similar vein, 75% of these institutions likewise voted against Deora’s proposed compensation. However, both motions were approved thanks to the vocal backing of small-scale shareholders, who own the majority of Paytm’s stock.