Vijay Shekhar Sharma, the founder, Chairman, Managing Director, and CEO of Paytm’s parent company One97 Communications, has voluntarily surrendered 2.1 crore employee stock options (ESOPs) valued at approximately Rs 1,800 crore, according to recent regulatory filings and market data
Background and Context
These ESOPs were granted to Sharma under the One97 Employees Stock Option Scheme, 2019, around the time of Paytm’s initial public offering (IPO) in 2021. At that time, Sharma held a 14.7% stake in the company but transferred about 30.9 million shares to the Sharma Family Trust via Axis Trusteeship Services, reducing his direct shareholding below 10%. This maneuver made him eligible for the ESOP program without being classified as a promoter, which is prohibited from receiving ESOPs under Indian regulations.
However, the Securities and Exchange Board of India (SEBI), the market regulator, issued show-cause notices to Sharma and other board members for violating rules related to the granting of ESOPs to significant shareholders and for alleged misrepresentation of facts during the IPO process.
The Surrender of Shares
In response to SEBI’s scrutiny, Vijay Shekhar Sharma submitted a letter on April 16, 2025, voluntarily forfeiting all 2.1 crore ESOPs granted to him. Following this, Paytm cancelled these shares, which were then returned to the ESOP pool for future allocation under the company’s ESOP scheme.
Financial Impact
This surrender will lead to a one-time, non-cash accounting charge of Rs 492 crore as an accelerated ESOP expense in the fourth quarter of the financial year 2025. Correspondingly, there will be a reduction in ESOP expenses in future years, improving the company’s future earnings profile.
Market Reaction and Company Performance
Following the announcement, Paytm’s share price remained relatively stable, trading around Rs 859 to Rs 867 per share on the National Stock Exchange. The company had reported narrowing net losses and a decline in revenue in recent quarters, reflecting ongoing challenges in its business operations.
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