Paytm CEO Vijay Shekhar Sharma Forgoes 2.1 Crore ESOPs Amid Regulatory Lens
Last year, SEBI had issued a show-cause notice to Paytm over the ESOPs granted to founder and CEO Vijay Shekhar Sharma.
Paytm Chief Executive Officer Vijay Shekhar Sharma has voluntarily forgone all 2.1 crore employee stock option plan, or ESOP units granted to him, according to an exchange filing on Wednesday.
One 97 Communications Ltd., the parent entity of Paytm, informed the exchanges that Sharma had written a letter to the company, seeking to forego all of his ESOP units with "immediate effect". The request was approved by the nomination and remuneration committee of the company's board in a meeting held during the day.
"...the NRC has consequently treated the unvested ESOPs in question as cancelled and the same have been returned back to the ESOP pool under One 97 Employees Stock Option Scheme, 2019," the exchange filing said.
This will result in a one-time, non-cash, acceleration of ESOP expense of Rs 492 crore in the quarter ended March 31, 2025, and an equivalent lowering of ESOP expenses in future years, it added.
"As a part of our normal practice, we will share the illustrative ESOP cost schedule along with our Q4 FY 2025 results," the company further said.
Under Regulatory Lens
Last year, the Securities and Exchange Board of India had issued a show-cause notice to Paytm over the ESOP units granted to Sharma, the company's founder and CEO, prior to its initial public offering.
Sharma was issued the 2.1 crore ESOPs, with the intent of vesting them equally over the next five years, in financial year 2021-22. The payments firm went public during the same fiscal.
SEBI's scrutiny in the matter centred around Sharma's status as a public shareholder in Paytm. As per the market regulator's norms, ESOPs are strictly prohibited to be issued to promoters.
The alleged violation of norms in granting of ESOPs to Sharma was flagged in January 2023 by Institutional Investor Advisory Services India Ltd. The proxy advisory firm questioned whether rules were circumvented in the matter by the startup.
Paytm, in an exchange filing in August last year, had stated that it believes to be in compliance with all the norms related to the matter. "Based on an independent legal opinion obtained by the management, it believes that the company is compliant with the relevant regulations," it had stated.
As per the shareholding available at the end of March 2025, Sharma holds a 9.1% direct stake in the company. He also holds a 4.87% stake through a trust managed by Axis Trustee and also controls 10.27% of stake through Resilient Asset Management BV in agreement with Antfin (Netherlands) Holding BV.
Overall, Sharma directly and indirectly holds 24.24% equity stake in One97 Communications.
Notably, Paytm last year felt the wrath of regulatory action against its banking arm – Paytm Payments Bank, which was was pulled up by the Reserve Bank of India in January 2024 for non-compliance with norms. The move had had impacted the company's wallet and banking services, apart from hammering its stock.
