Vijay Shekhar Sharma forgoes 21M ESOPs, Paytm to incur Rs 492 Cr one-time expense in Q4 FY25

Paytm Founder and CEO Vijay Shekhar Sharma has voluntarily surrendered all 21 million employee stock options (ESOPs) granted to him under the company’s 2019 stock option plan, the digital payments firm disclosed to stock exchanges on Tuesday.

The decision was communicated via a letter dated April 16, 2025, and acknowledged by Paytm’s Nomination and Remuneration Committee (NRC) during a meeting held the same day. The committee treated the unvested ESOPs as cancelled, and returned them to the company’s stock option pool.

“This will result in a one-time, non-cash, acceleration of ESOP expense of Rs 492 crores in Q4 FY 2025, and an equivalent lowering of ESOP expenses in future years,” the company said in a filing to the Bombay Stock Exchange and the National Stock Exchange.

Paytm added that an “illustrative ESOP cost schedule” will be shared with its Q4 earnings report for the financial year.

Paytm is very close to EBITDA profitability when excluding UPI incentives. If UPI incentives were included, the company would already be profitable, Madhur Deora, Paytm's President and Group CFO, had earlier told analysts during the Q3 analyst call.

"We’re very close to EBITDA before ESOP profitability without UPI incentives. For example, if we had received this quarter’s share of UPI incentives in this quarter, we would already be profitable." Deora said.

In 2023, proxy advisory firm Institutional Investor Advisory Services (IiAS) had alleged that Vijay Shekhar Sharma, popularly known as VSS, may not have been eligible to receive ESOPs under Indian regulations.

According to IiAS, while Sharma directly held less than 10% equity in Paytm, he enjoyed rights and privileges similar to those of a promoter, including board permanency as a non-retiring director. The firm argued that Sharma’s direct stake, along with equity held on behalf of the Sharma Family Trust—managed by Axis Trustee Services Ltd—should have been aggregated to assess compliance with the 10% ownership threshold, which disqualifies directors from receiving ESOPs.

The note highlighted that Sharma’s 21 million ESOP grant in FY21 was larger than the size of Paytm’s share buyback announced in December 2022, and if he exercised even 30% of those options, his direct holding could have crossed the regulatory ceiling.