In a surprising turn of events, One97 Communications, the parent company behind Paytm, saw its share price fall by over 2% during Thursday’s trading session. This decline followed the announcement that Vijay Shekhar Sharma, the company’s Managing Director and CEO, has chosen to relinquish 21 million shares allotted to him under the Employee Stock Ownership Plan (ESOP). This decision has drawn attention amid ongoing scrutiny from market regulators.
Paytm’s Share Price Reaction
As of 10:20 AM, Paytm’s stock was priced at ₹849.20, a drop from its previous close of ₹864.95. This shift in valuation has raised eyebrows among investors and market watchers alike.
- Current Share Price: ₹849.20
- Previous Close: ₹864.95
CEO’s Voluntary ESOP Forgoing
In a letter dated April 16, 2025, Vijay Shekhar Sharma officially communicated his decision to forgo 21,000,000 ESOPs, which were granted under the One97 Employees Stock Option Scheme, 2019. According to the company’s exchange filing, this action will trigger a one-time, non-cash ESOP expense of ₹492 crores in the Q4 FY 2025 financial results. The company plans to provide a detailed schedule of ESOP costs along with their quarterly results.
- Total ESOP Value: ₹1,815.45 crores
- Expense Impact: ₹492 crores in Q4 FY 2025
Historical Context of Shareholding
Prior to Paytm’s IPO in 2021, Sharma held a 14.7% stake in the company. To make himself eligible for ESOP allocations, he reduced his stake to 9.1% by transferring approximately 30.97 million shares to Axis Trustee Services, representing his family trust. This move was critical for compliance with regulatory standards.
Regulatory Scrutiny and SEBI Notices
The Securities and Exchange Board of India (SEBI) has been investigating potential misrepresentations associated with Paytm’s November 2021 IPO. In August 2024, SEBI issued a show-cause notice regarding the ESOP grant to Sharma, highlighting a possible violation of rules concerning share-based employee benefits. Under these regulations, individuals with substantial shareholdings who can influence company decisions are prohibited from holding ESOPs.
Changes to Paytm’s ESOP Policy
In response to regulatory feedback, Paytm revamped its ESOP policy in March by implementing a performance-based vesting system linked to employees’ latest annual appraisals. Recently, the company has also expanded its ESOP pool, granting options to eligible employees on multiple occasions over the past six months.
This decision by the CEO and the subsequent market response underscore the delicate balance of corporate governance and investor confidence as Paytm navigates its growth trajectory. For more insights on stock market trends and corporate governance, visit SEBI’s official website or explore our other articles on investment strategies and market analysis.
