Advisory firm recommends against reappointment of Vijay Shekhar Sharma as Paytm CEO

An investors’ advisory firm has recommended against the reappointment of Vijay Shekhar Sharma as the chief executive officer (CEO) and managing director (MD) of Paytm owner, One97 Communications.

The Institutional Investor Advisory Services (IiAS), in its report on August 9, said that Sharma had made several commitments in the past to make the company profitable, but these never played out. The IiAS said it believes the board must consider professionalising the management.

The report added that the stock price of One97 Communications fell by 63.6% from the issue price of ₹2,150 apiece resulting in wealth destruction for shareholders.

The company also reported a cash loss of ₹1,200 crore in the financial year 2022 and losses in the first quarter of FY 23 are high.

The IiAS has expressed concerns that Vijay Shekhar Sharma is not liable to retire by rotation.

“He (Sharma) will get board permanency if he continues in a non-executive capacity following the end of his term as Managing Director,” the August 9 report also said.

A report by news agency PTI on Friday said that One97 Communications board (OCL) board approved an annual remuneration of ₹4 crore for Sharma along with perquisites up to 25% of the remuneration, two vehicles and related expenses, utility and other expenses concerning the company leased accommodation and club subscription.

The board also approved reimbursement of all legitimate expenses incurred by Sharma in the performance of his professional duties including but not limited to communication, travel and business entertainment expenses, the PTI report added.

The IiAS has estimated Sharma’s FY23 remuneration at ₹796.28 crore, comprising 2.1 crore stock options at an exercise price of ₹9 which is a deep discount to the market price on the date of grant. The IiAS report added that Sharma was granted 46.5% of the entire stock option pool, which is equal to 3.2% of the outstanding share capital.

Paytm has not commented on the advisory firm’s report so far. But a company official, who did not wish to be identified, told PTI on Friday that proxy firms only advise the institutions who have subscribed to their services.

Meanwhile, the IiAS has also issued an advisory against remuneration for Paytm group chief financial officer Madhur Deora while favouring his appointment as a whole-time director designated as Executive Director, President and Group Chief Financial Officer for five years from May 20 this year.

(With agency inputs)