NEW DELHI — In a move designed to align employee compensation with operational excellence and shareholder value, One 97 Communications Limited—the parent company operating digital payments leader Paytm—has proposed substantial revisions to its employee stock option framework. The board has submitted resolutions to shareholders seeking approval to tighten vesting conditions under its existing scheme without expanding the company's overall equity pool.

According to the official notice for the company’s 26th Annual General Meeting (AGM), the proposed amendments to the One 97 Employees Stock Option Scheme 2019 establish a performance-differentiated mechanism for future grants. Under the new guidelines, stock options will vest on a graded basis ranging from 10 percent to 100 percent, contingent upon employees achieving rigorous, multi-tiered benchmark evaluation criteria.

Transition from Fixed to Graded Performance Vesting

The core of the revision marks a significant operational shift from Paytm's former vesting structure. Previously, any employee who attained a basic appraisal rating of "Meets expectation" or above automatically qualified for 100 percent of their scheduled vesting options on the designated date, while those rated below received zero.

Under the amended framework, a "Meets expectation" rating acts only as an entry-level eligibility threshold rather than a guarantee for full allocation. The actual percentage of granted options that convert to vested stock will now rely on a holistic multi-factor assessment.

Comprehensive Review Mechanics and Leadership Governance

The AGM notice outlines that future ESOP vesting decisions will evaluate a broader spectrum of operational metrics:

  • Role-Specific Key Result Areas (KRAs): Direct contribution to individual functional goals.

  • Business Unit Performance: Output and profitability metrics of specific operational verticals.

  • Company Performance: Enterprise-wide revenue and profitability metrics (such as PAT performance targets).

  • Future Leadership Potential: Long-term strategic value and retention priority.

Final ESOP performance ratings and calibrated vesting percentages will require explicit sign-off from Chief Executive Officer Vijay Shekhar Sharma.

Protection for Existing Grants and Zero Dilution

Paytm confirmed that the revised policy applies strictly to future option grants. All options already granted to employees under the ESOP Scheme 2019 prior to this notice remain fully grandfathered, preserving all existing vesting schedules and contractual terms.

Furthermore, the board emphasized that the governance update imposes no additional equity dilution on public shareholders. The total options available under the 2019 pool remain capped, with approximately 2.67 crore ungranted or lapsed options currently remaining in the pool. Minimum vesting remains set at one year, with a maximum window extending up to five years as determined by the Nomination and Remuneration Committee (NRC).

The board stated that aligning the framework with SEBI's Share Based Employee Benefits regulations reinforces capital efficiency while rewarding top-tier talent who drive sustained corporate earnings growth.