Paytm’s Vijay Shekhar Sharma surrenders Rs 18000000000 ESOPs, gives up 2.1 crore Employee Stock Options after SEBI’s…

Paytm’s founder and CEO, Vijay Shekhar Sharma, has voluntarily surrendered 21 million Employee Stock Options (ESOPs) after SEBI’s scrutiny. On April 16, the company announced Sharma’s decision in a filing after a notice issued by the SEBI in August 2024. The notice alleged violations of regulations governing share-based employee benefits.

 The shares were granted to Sharma as part of ESOP (employee stock ownership plan) at the time of listing of One97 Communications, which owns Paytm brand.

It will now return to the ESOP pool under One 97 Employees’ Stock Option Scheme, 2019. 

“Vijay Shekhar Sharma, Chairman, Managing Director and Chief Executive Officer of the Company vide letter dated April 16, 2025 has informed the company that he has voluntarily forgone all 2,10,00,000 (Two Crore Ten Lakhs) ESOPs granted to him under One 97 Employees Stock Option Scheme, 2019, with immediate effect,” the filing said.

SEBI’s Regulatory Concerns

In August 2024, SEBI raised concerns over the allocation of 21 million ESOPs to Sharma, stating it violated rules controlling share-based employee benefits. According to Indian regulations, major shareholders with decision-making authority in a company are not eligible to hold ESOPs.

Earlier, Vijay Shekhar Sharma was holding a 14.7% stake in Paytm a year before its public filing in 2021. To qualify for ESOP grants, he reduced his stake to 9.1% by transferring 30.97 million shares to Axis Trustee Services, which acts on behalf of the Sharma Family Trust.

SEBI had also issued notices to Sharma and other board members for allegedly misrepresenting facts during Paytm’s Initial Public Offering (IPO) in November 2021.

“This will result in a one-time, non-cash, acceleration of ESOP expense of Rs 492 crores in the fourth quarter of financial year 2025, and an equivalent lowering of ESOP expenses in future years,” the filing said. The ESOP expenses are notional value recorded in books as per accounting rules.

Paytm also mentioned that details regarding the ESOP cost schedule will be shared with its Q4 FY2025 financial results.

After SEBI’s concerns, Paytm made several changes to its ESOP scheme in March 2025. These changes like linking ESOP related to the latest appraisal cycle and annual performance ratings. In recent months, Paytm has expanded its ESOP pool and allocated options to eligible employees at least twice in the past six months.

Paytm’s Financial Performance

For Q3 FY2024-25 (October-December), Paytm’s parent company, One 97 Communications, reported a reduction in net loss of Rs 208 crore compared to Rs 220 crore in the same quarter the previous year. However, the company’s revenue declined by 36%, falling to Rs 1,828 crore from Rs 2,850 crore in Q3 FY2024.

Whereas Paytm posted a net profit of Rs 930 crore in Q2 FY2024-25, primarily driven by a one-time contribution of Rs 1,345 crore from the sale of its movie ticketing business. Excluding this amount, the company incurred a loss of Rs 415 crore for the quarter.

(With Inputs From PTI)

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