In a significant development, Paytm founder and CEO Vijay Shekhar Sharma has voluntarily surrendered 21 million employee stock options (ESOPs) valued at over ₹1,800 crore. The decision comes in the wake of regulatory scrutiny by the Securities and Exchange Board of India (SEBI) over alleged violations in the issuance of share-based employee benefits.
The ESOPs, granted under the One97 Employees Stock Option Scheme, 2019, were flagged by SEBI last August for non-compliance with its regulations. SEBI rules prohibit large shareholders with substantial influence over company decisions from holding ESOPs. To qualify for the grant, Sharma had reduced his stake in Paytm from 14.7% to 9.1% by transferring shares to Axis Trustee Services on behalf of the Sharma Family Trust.
Paytm disclosed the decision in a filing on April 16, 2025, stating that the unvested ESOPs have been canceled and returned to the company’s ESOP pool. This move will result in a one-time, non-cash ESOP expense of ₹492 crore in Q4 FY25, with a corresponding reduction in future ESOP expenses.
The regulatory scrutiny also led to show-cause notices being issued to Sharma and other board members for alleged misrepresentation during Paytm’s IPO in November 2021. In response, Paytm has made amendments to its ESOP policies, linking vesting to annual performance ratings and expanding the ESOP pool for eligible employees.
Sharma’s decision to relinquish the ESOPs reflects his commitment to addressing regulatory concerns and ensuring compliance with SEBI norms. The move is expected to bolster investor confidence as Paytm continues its journey toward profitability and growth.
