Paytm announced on 16 April that Vijay Shekhar Sharma, its founder and CEO, has voluntarily given up 21 million employee stock options (ESOPs) granted under the One 97 Employees Stock Option Scheme, 2019. The decision comes at a time when the company is facing regulatory scrutiny over the issuance of these stock options.
The ESOPs, valued at over Rs 1,800 crore based on Paytm’s current share price of Rs 864.5, have now either been cancelled or returned to the company’s ESOP pool. This move results in a one-time, non-cash ESOP expense of Rs 492 crore in the fourth quarter of FY2025. However, this will reduce future ESOP-related expenses. The company said it will provide a detailed cost schedule when it announces its Q4FY25 results.
Sharma had received these ESOPs during Paytm’s public listing in 2021, when he reduced his shareholding from 14.7 to 9.1 per cent by transferring shares to a family trust to meet eligibility criteria for stock options.
The Securities and Exchange Board of India (SEBI) had raised objections to this, citing that individuals with significant control in a company should not receive ESOPs. A show-cause notice was issued to Sharma and board members in August 2024 for allegedly violating share-based benefit rules.
Recently, Paytm revised its ESOP policy to tie vesting more closely with employee performance. The company has also expanded its ESOP pool and conducted fresh allotments to eligible employees in the last six months.
This development is seen as a significant move by Paytm’s leadership to address regulatory concerns and reset its governance practices around executive compensation.
