Fintech major Paytm saw its employee stock option (ESOP) expenses of the so-called key managerial personnel, including CEO and managing director Vijay Shekhar Sharma and CFO Madhur Deora, surge 50 times to Rs 567 crore in FY22, up from Rs 11.2 crore in the previous financial year.
This 4,963 percent rise in stock compensation has coincided with a massive hit to the stock after the Noida-based fintech went public in November 2021 at a valuation of around $20 billion.
The company’s shares are trading at Rs 717 apiece, down 67 percent from the issue price of Rs 2,150.
“We believe that over the past year, our team has done a great job in massively improving our revenues and contribution profits, which allows for investments in our payments and credit businesses while at the same time reducing our EBITDA losses,” the Paytm CEO said in his annual letter to shareholders.
Paytm’s first annual report after its listing also shows that the stock-based compensation of key managerial personnel was more than 55X of cash-based remuneration in FY22. The ratio was 1.5X in FY21.
The cash compensation, including salaries, bonuses and incentives, of these senior managers increased 43 percent to Rs 10.3 crore in FY22, from Rs 7.2 crore in the previous fiscal.
Sharma’s cash-based remuneration remained flat in FY22, compared to the preceding financial year, at Rs 4 crore.
He was granted 2.1 crore stock options in FY22 as approved by the members of the company at their extraordinary general meeting on October 4, 2021. These grants were made under the One 97 Employees Stock Option Scheme 2019 and are subject to achieving certain milestones.
Sharma holds 5.8 crore equity shares and his shareholding is 8.89 percent. Earlier this year, the Paytm founder said his ESOPs would vest only when the market capitalisation of the company crosses the valuation at the initial public offering.
“We are seeing excellent momentum in our businesses and are on track to achieve operating profitability (EBITDA before ESOP cost) by the quarter ending September 2023,” Sharma said in his letter.
Chief financial officer Deora saw his remuneration increase by 21 percent to Rs 3.6 crore in FY22 and subject to shareholder approval, his remuneration will be raised to Rs 3.8 crore in the current financial year.
Deora was granted 2.2 lakh ESOPs in FY22 and a further 55,556 stock options on May 1, 2022.
The average increase in the remuneration of employees, excluding those of KMP, during FY22 was 14 percent. The percentage increase in the median remuneration of employees in FY22 was 18 percent. There were 7,278 employees (excluding subsidiary companies' employees) on the rolls as of March 31, 2022.For the full year FY22, the company posted a loss of Rs 2,396 crore against a loss of Rs 1,701 crore in the previous fiscal. Revenues from operations for FY22 stood at Rs 4,974 crore, up 77 percent from FY21.