Paytm’s Vijay Shekhar Sharma forfeits ESOPs worth ₹492 crore after Sebi notice

Paytm founder and chief executive officer Vijay Shekhar Sharma has forfeited 2.1 crore shares of One97 Communications, the parent entity of the digital payments firm, cutting down the beleaguered company’s ESOP expenses by ₹492 crore.

Eight months ago, the Securities and Exchange Board of India (Sebi) concluded that awarding 2.1 crore employee stock options (ESOPs) to Sharma breached its regulations related to share-based employee compensation.

Major shareholders with the power to influence company decisions are not allowed to hold ESOPs. A year before Paytm's public listing in 2021, Sharma owned a 14.7% stake in the company. In order to qualify for ESOP grants, he reduced his holding to 9.1% by transferring 30.9 million shares to Axis Trustee Services, which managed the shares on behalf of the Sharma Family Trust. SEBI issued notices to Sharma and other board members involved during Paytm's November 2021 IPO, accusing them of misrepresenting facts.

The Nomination and Remuneration Committee of the Board of the company at its meeting held on April 16, noted that One97 chairman, managing director and CEO voluntarily forgone all 2.1 crore ESOPs granted to him under One 97 Employees Stock Option Scheme, 2019, with immediate effect.

“Acting on the aforementioned voluntary offer, 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 digital payments major said in a statement.

“This will result in a one-time, non-cash, acceleration of ESOP expense of ₹492 crore in Q4 FY 2025, and an equivalent lowering of ESOP expenses in future years. As a part of our normal practice, we will share the illustrative ESOP cost schedule along with our Q4 FY 2025 results,” the statement said.

Shares of Paytm parent One97 Communications fell as much as 1% in opening trade.

In March, Paytm’s wholly-owned subsidiary Paytm Money was granted a certificate of registration as a research analyst by Sebi. With this registration, Paytm Money can offer SEBI-compliant research services, including investment insights, research reports, and data-driven analysis. “This milestone aligns with Paytm Money’s objective to expand its offerings in the investment ecosystem, enhance user experience, and provide expert-backed insights to both retail and institutional investors. These services will soon be integrated into the Paytm Money app as part of a research and advisory offering, empowering investors to make well-informed financial decisions,” the company had said.