Paytm CEO Vijay Shekhar Sharma Surrenders 2.1 Cr ESOPs

Paytm founder, CEO and MD Vijay Shekhar Sharma has voluntarily given up 2.1 Cr unvested employee stock options (ESOPs), which came under the scanner of markets regulator SEBI.

“Mr. Vijay Shekhar Sharma… 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,” Paytm parent One 97 Communications said in an exchange filing.

Following this, the stock options have now been cancelled and returned to the ESOP pool.

Paytm said that the move will lead to an increase of INR 492 Cr in its ESOP expenses in Q4 FY25.

“This will result in a one-time, non-cash, acceleration of ESOP expense of INR 492 Cr in Q4 FY 2025, and an equivalent lowering of ESOP expenses in future years,” it added.

SEBI Lens On Grant Of ESOPs

In the March quarter of 2024, Paytm received a showcause notice from the markets regulator in relation to grant of the 2.1 Cr ESOPs to Sharma during the year ended March 31, 2022.

The company came under SEBI’s scrutiny over alleged violations related to promoter misclassification during its IPO in 2021. Notably, at the time of the IPO, Sharma was listed just as an employee of the company.

In addition, Sharma also transferred shares owned by him to a family trust just before the IPO to reduce his direct holding below 10%, possibly to avoid being classified as a promoter.

He owned about 14.7% stake in the company a year before Paytm’s 2021 public filing, which he reduced to 9.1% by transferring 30.97 Mn shares to Axis Trustee Services, which was acting on behalf of his family trust.

SEBI was said to have taken a view that Sharma should have been officially listed as a promoter, instead of just an employee.

SEBI regulations don’t allow promoters to receive ESOPs after a company goes public.

SEBI’s investigation was reportedly triggered by inputs from the RBI, which was also closely examining Paytm Payments Bank.

Notably, the RBI’s clampdown on Paytm Payments Bank in 2024 dealt a heavy blow to the company.

Meanwhile, in January this year, eight officials and directors of Paytm, current as well as former, settled a case with SEBI by paying INR 3.32 Cr. Some of the officials were alleged to have failed in discharging their duties with “unbiased and independent approach” while taking decisions in matters pertaining to grant of ESOPs to Sharma and his relatives.

Amid these regulatory troubles over the last year or so, Paytm has reduced its headcount, sold some non-core businesses, and has shifted its focus to the core revenue streams.

Paytm’s Push For Profitability

Paytm is focusing on its key businesses – payments, lending, and merchant services – currently.

In Q3 FY25, it managed to narrow its consolidated net loss by 6% to INR 208.5 Cr in Q3 FY25 from INR 221.7 Cr in the same period last year. However, revenue declined 36% year-on-year to INR 1,827 Cr in the quarter.

Meanwhile, Sharma is confident of Paytm delivering a profit in Q1 FY26. “I can tell you very happily that with the team and the effort in the business that we have done, we are clearly committed to delivering profit in the next quarter,” Sharma said in February.

However, the company’s UPI market share has dropped from 10% to just short of 7% in less than a year. But after the company sold Paytm Insider, it seems to be freeing up capital and streamlining operations to concentrate on high margin segments like wealth management and insurance distribution.

Shares of Paytm ended today’s trading session 2.97% higher at INR 864.50 on the BSE.

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