While Sharma isn’t classified as a promoter – Indian parlance for controlling shareholder – he has rights akin to one, including a potential permanent seat on the board, IiAS said in a note Friday. “These provisions and structures give Vijay Shekhar Sharma ‘entrenchment’ similar to that enjoyed by promoter families in the more traditional companies,” IiAS said.
It added the regulator must examine Sharma’s move to pare his direct stake by transferring equity to a family trust, barring which he wouldn’t be eligible for the Employee Stock Option Plan.
Indian law prohibits stock options to promoters, and to directors who directly or indirectly hold more than 10 per cent of the firm. Scrutiny over pay has also increased after Paytm sank 75 per cent since its initial public offering last year, following which Sharma in April said his stock grants would vest only after the company’s market capitalisation exceeded the IPO level on a “sustained basis.”
Reiterating that statement in response to the IiAS report, Paytm’s spokesperson told Bloomberg the company had followed all provisions of applicable law in classifying Sharma as non-promoter and complied with due process for the grant of ESOPs, including shareholder approval. His remuneration remains unchanged since November 2020 and through 2025, the spokesperson said.
Sharma was granted 21 million options at ₹9 a share in the financial year ended March 2022, then valued at $500 million.
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