Vijay Shekhar Sharma Gives Up 2.1 Crore Paytm Shares Valued at INR 1,800 Crore

On 16 April, Paytm revealed that Vijay Shekhar Sharma, the company's founder and CEO, had renounced 21 million employee stock options worth over INR 1,800 crore. This action came months after the Securities and Exchange Board of India (SEBI) had sent him show-cause notices for breaking the rules governing the granting of share-based employee benefits. Vijay Shekhar Sharma, the company's chairman, managing director, and chief executive officer, notified the company in a letter dated April 16, 2025, that he had voluntarily renounced all 2,10,00,000 ESOPs that had been granted to him under the One 97 Employees Stock Option Scheme, 2019, with immediate effect, according to a regulatory filing made by Paytm to the stock exchanges.

How this will Change the Business Dynamics of Paytm?

According to the filing, the company's ESOP programme has refunded the remaining unvested ESOPs to the ESOP pool, while some have been terminated. The business added that this action will lead to a one-time, non-cash acceleration of INR 492 crore in ESOP expenses in Q4 FY 2025, as well as a corresponding reduction in ESOP expenses in subsequent years. In addition, Paytm stated that when it releases its Q4 Q4FY25 results, it will provide information about its ESOP cost timeline. A year prior to Paytm's 2021 IPO, Sharma held a 14.7% stake in the fintech company. He transferred 30.97 million shares to Axis Trustee Services, which operated on behalf of Sharma's family trust, in order to lower his ownership to 9.1% and qualify for ESOP incentives. Due to suspected factual misrepresentation, Sharma and other board members who served during Paytm's November 2021 IPO received notices from SEBI.

SEBI’s Move Forced Sharma to React

In August 2024, Paytm received a show-cause notice from SEBI for Vijay Shekhar Sharma's ESOP grant, which violated the regulations governing share-based employee perks. Large shareholders who have the power to affect business decisions are prohibited from owning ESOPs under SEBI's market regulations. The corporation made improvements to its ESOP plan in March, including tying ESOP vesting to the most recent appraisal exercise's annual performance ratings. Additionally, Paytm has distributed ESOPs to qualified workers at least twice in the last six months and increased the size of its ESOP pool in recent months.

Since its listing in November 2021, One97 Communications, the parent company of Paytm, has never reported a positive EBITDA. Nonetheless, it has continuously emphasised EBITDA prior to ESOP expenditures as a crucial indicator. On May 30, 2025, the business is expected to release the results of the March quarter. An international news outlet reports that Paytm is anticipated to disclose an adjusted net loss of roughly INR 9 crore and an EBITDA of INR 64 crore on revenue of INR 2,051 crore. It recorded an EBITDA of INR 559 crore for FY24 (excluding ESOP charges).