Paytm CEO Sharma forgoes 21 million employee stock options worth over ₹1,800 crore amid SEBI scrutiny

Paytm announced on Wednesday, April 16, that its founder and chief executive officer (CEO) Vijay Shekhar Sharma has foregone 21 million employee stock options granted to him, worth over ₹1,800 crore, months after the Securities and Exchange Board of India (SEBI) issued show-cause notices over violation of rules on grant of share-based employee benefits.

"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 ESOPs granted to him under One 97 Employees Stock Option Scheme, 2019, with immediate effect," said Paytm in a regulatory filing to the stock exchanges.

Paytm CEO forgoes ESOPs

In an exchange filing, Sharma said he has decided to voluntarily forgo 21 million ESOPs granted to him under the One 97 Employees Stock Option Scheme, 2019, with immediate effect. The filing added that some of the unvested ESOPs have been cancelled, while the remaining have been returned to the ESOP pool under the company's ESOP scheme.

“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,” said the company. Paytm added that the company will share details on its ESOP cost schedule while declaring its Q4FY25 results.

Paytm ESOP valued at over ₹1,800 crore

Based on Paytm's share closing price of ₹864.5 apiece, the ESOPs are valued at ₹1,815.45 crore. Sharma was granted the shares as part of the ESOP at the time of the listing of One97 Communications, which operates Paytm. They will return to the ESOP pool under the One97 Employees' Stock Option Scheme, 2019.

Sharma owned a 14.7 per cent stake in Paytm a year before the fintech's 2021 listing. To become eligible for ESOP grants, he reduced his shareholding to 9.1 per cent by transferring 30.97 million shares to Axis Trustee Services, which acted on behalf of Sharma's family trust. SEBI had issued notices to Sharma and other board members who held roles during Paytm's November 2021 initial public offering (IPO) over alleged misrepresentation of facts.

SEBI order against Paytm ESOP grant

SEBI issued a show-cause notice to Paytm in August 2024 regarding the ESOP grant to Vijay Shekhar Sharma for violating rules governing share-based employee benefits. As per SEBI's market rules, large shareholders with the ability to influence company decisions cannot hold ESOPs.

In March, the company amended its ESOP scheme, linking ESOP vesting to annual performance ratings from the latest appraisal exercise, among other changes. Paytm has also expanded its ESOP pool in recent months and allotted ESOPS to eligible employees at least twice in the past six months.