My ESOP Grant Won’t Vest Until Paytm’s Market Cap Crosses IPO Price: Vijay Shekhar Sharma

At the first annual general meeting (AGM) since last year’s IPO, Paytm CEO Vijay Shekhar Sharma informed the shareholders that his employee stock option plan (ESOP) grant will not vest until the fintech major’s share price does not cross the price at the initial public offer (IPO) of INR 2,150.

On Friday (August 19), Paytm’s shares closed at INR 771 apiece, down 1.93% from its previous close. Therefore, the fintech’s share price is still more than 64% less than its IPO price. In other words, Paytm’s shares will have to rise by 3X for Sharma’s ESOP grant to vest.

This is also not the first time that Sharma has stated this.

In a letter to the shareholders in April, the Paytm CEO first said that his stock options grant will only vest after Paytm’s share price remains above the IPO price ‘on a sustained basis’. Coincidentally, this letter was also the first of many instances that Sharma said that Paytm will be operationally profitable by September 2023.

He reiterated the same in his opening remarks at the AGM. “We are committed to building long-term profit. My ESOP grant is not vested until Paytm market cap has not crossed IPO price,” Sharma said.

According to Paytm’s shareholding pattern as of June 30, 2022, Sharma held 5,78,45,053 equity shares in the company or about 8.92%. 

Sharma was reappointed Paytm’s CEO and MD for a period of five years in May 2022. However, ahead of the AGM, three proxy advisory firms opposed his reappointment, calling for the board to vote him out.

“Vijay Shekhar Sharma has made several commitments in the past to make the company profitable, however, these have not played out. We believe the board must consider professionalising the management,” said Institutional Investor Advisory Services India Limited (IiAS), one of the advisory firms in opposition.

While the matter of Sharma’s reinstatement and the consequent increase in his remuneration was discussed at the AGM, Paytm has not disclosed the shareholders’ call on the matter.

At Friday’s AGM, Sharma reassured the investors that Paytm is on track to achieve the September 2023 profitability target, with its continued growth. “We are ensuring that the company is trying to be profitable. As they say, in due course, the stock price will take care of itself,” the Paytm CEO added.

Paytm’s consolidated loss widened by 69% YoY In Q1 FY23 to reach INR 645.4 Cr. At the same time, however, revenue from operations grew 89% YoY to INR 1,680 Cr.

The CEO noted that Paytm is making ‘world-class’ technology and is looking to expand its business even further, eyeing an international expansion sometime in the future. It should be noted that Paytm is already present in Japan via PayPal.