Paytm CEO Surrenders 2.1 Crore ESOPs — What’s Behind the Big Move?

Vijay Shekhar Sharma, the founder and chief executive officer of Paytm's parent entity of One97 Communications, has given up 2.1 crore employee stock option plan (ESOP) units already awarded to him voluntarily. 

The company announced an exchange filing on April 16, 2025, saying that Sharma had sought the cancellation of these unvested ESOPs with immediate effect. The board's Nomination and Remuneration Committee (NRC) sanctioned his application, and the ESOPs have been credited to the company's ESOP pool under the One97 Employees Stock Option Scheme, 2019.

Paytm: Financial Implications

The cancellation of these ESOPs will lead to a one-time, non-cash ESOP expense acceleration of Rs 492 crore for the quarter ended March 31, 2025. This adjustment will be accompanied by a corresponding decrease in ESOP expenses in subsequent financial years. 

The company intends to publish an illustrative ESOP cost schedule with its Q4 FY2025 results.

Paytm: Regulatory Background

This move comes after the Securities and Exchange Board of India (SEBI) scrutiny, which had served Paytm a show-cause notice on the issue of the grant of ESOPS to Sharma. 

According to SEBI norms, significant shareholders who hold the power to affect company decisions are not allowed to receive ESOPs. Sharma held a 14.7% stake in Paytm a year before the 2021 initial public offering (IPO) and lowered it to 9.1% by selling shares to a family trust governed by Axis Trustee Services. SEBI wondered if this reorganisation was to bypass the law, as Sharma's control over the company was still significant.

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Vijay Sharma: Current Shareholding

As of March 2025, Sharma has a direct holding of 9.1% in One97 Communications. He also has an indirect holding of 4.87% through a trust that is managed by Axis Trustee Services and has 10.27% control through Resilient Asset Management BV in accordance with Antfin (Netherlands) Holding BV. Sharma's total direct and indirect holdings collectively make up a 24.24% equity interest in the company.

Sharma's decision to relinquish his ESOPs seems to be an effort to keep pace with regulatory requirements and ensure transparency in corporate governance. The company's upcoming financial disclosures will reveal more about the effect of this move on its financial reports.