Paytm CEO Vijay Shekhar Sharma Forfeits 21 Million ESOPs Amid SEBI Scrutiny

Paytm's shares have come under renewed focus after founder and CEO Vijay Shekhar Sharma voluntarily relinquished 21 million employee stock options (ESOPs), valued at over ₹1,800 crore, following regulatory scrutiny by the Securities and Exchange Board of India (SEBI). The move, announced on April 16th, 2025, comes as Sharma seeks to resolve issues raised by SEBI concerning the allocation of these ESOPs.​

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Regulatory Concerns and SEBI's Intervention

SEBI had previously issued show-cause notices to Paytm's Vijay Shekhar Sharma and other board members, questioning the legitimacy of granting ESOPs to a significant shareholder. According to Indian regulations, individuals holding substantial influence over a company are ineligible for ESOPs. Sharma, who held a 14.7% stake in Paytm a year before its 2021 IPO, had reduced his shareholding to 9.1% by transferring shares to a family trust, aiming to qualify for the ESOPs. SEBI had shared its views this restructuring as a potential circumvention of the rules, leading to allegations of misrepresentation during the IPO process. ​

Financial Implications for Paytm

In its regulatory filing, Paytm stated that the forfeiture of the 21 million ESOPs would result in a one-time, non-cash acceleration of ESOP expenses amounting to ₹492 crore in the fourth quarter of FY25. This adjustment is expected to lower ESOP-related expenses in future financial periods for the company. Now, these unvested ESOPs returned by Sharma have been cancelled and restored to the company's ESOP pool under the One97 Employees Stock Option Scheme, 2019. ​

Market Reaction & Investor Sentiment

Trading activity in Paytm share price saw an uptick in the immediate aftermath of the announcement. While the share price reacted mildly initially, analysts argue that Sharma's forfeiture of the ESOPs may help build investor confidence because it evinces a commitment to regulatory compliance and good corporate governance. This step is said to help allay the residual concerns over the IPO and the company's regulatory tussles.

Broader Context and Future Outlook

Since its public listing on November 18th, 2021, Paytm has been saddled with regulatory tirades and financial turmoil. The company has continued to think through ways of improving compliance and restructuring leadership responsibilities in its quest toward maturity. Sharma's decision to give up the ESOPs is part of a broader plan to synergize with regulatory expectations and stabilise the company's market position. 

Now, as Paytm prepares to announce its Q4 FY25 results, this whole affair of ESOPs could fuel renewed investor interest, resulting in increased valuation for the company stock. Stakeholders will undoubtedly observe the company's financial performance relative to strategic initiatives.