Fintech platform BharatPe has launched its ‘ESOP Cheque Cash Karo’ scheme that will allow its employees to sell back their shares from the first vesting back to BharatPe. This comes at a time when people are facing a financial crisis due to the cutbacks in salaries.

The company’s decision to launch the scheme comes at the right time during this pandemic. Over 6% that is more than $25 million of BharatPe’s overall equity has been allotted to the ESOP pool, which is given to the employees along with their appointment letter. 

As reported by CNBC (1), BharatPe said in a statement, 

“ESOPs carry zero strike price. The vesting is front-ended in favor of employees with 25% vesting on year 1 & thereafter 2% every month. The employees are not required to exercise the ESOPs on leaving & can time it with a liquidity event anytime up to 5 years.”

According to KPMG, ESOPs have been used effectively to lure, retain, motivate, and compensate employees. There are many startups that are buying back shares from their employees and rewarding them in return. 

Eighteen months back, RazorPay also bought back their ESOPs of employees.

Supporting employees financially via buybacks

An ESOP is essentially an employee benefit plan under which an employee has the right to acquire shares at a discounted value without any underlying obligation to do so. 

Ashneer Grover, Co-founder & CEO at BharatPe, said that in the Indian ecosystem, ESOPs have been regarded as one of the most abused and misunderstood instruments. Verbal grants, back-ended vesting & last-minute changes even to have eroded employee faith in ESOPs.

Geetanshu Singh, an employee and the Head of Engineering at BharatPe, said that the buyback of ESOPs would help in supporting the current and even the ex-employees during this pandemic. 

BharatPe is encouraging its employees to bank their first ESOP cheque and enjoy the created cash value in the bank. 

One BharatPe ESOP = Rs 700k

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