Paytm proposes salary cuts for board members, sets annual compensation for independent directors at Rs 48 lakh

Ahead of its Annual General Meeting on September 12, Paytm has proposed significant salary revision for its board of directors. The company said the board members are committed to the company’s responsible financial discipline and good corporate governance. The new proposed remuneration framework will be subject to shareholder approval.

With the revised remuneration structure, the annual compensation of each Non-Executive Independent Director will be capped at Rs 48 lakh, with a fixed component of Rs 20 lakh. The variable component will be linked to attendance at the meetings and Chairpersonship / Membership positions held in the various committee(s) of the Board, to ensure good governance. The revised remuneration structure will be in effect from April 1, 2024.

Previously, the annual salaries of Non-Executive Independent Directors of Paytm’s board members including Ashit Ranjit Lilani was set at Rs 1.65 crore, while that of Gopalasamudram Srinivasaraghavan Sundararajan was set at Rs 2.07 crore.

According to the company’s exchange filing on Wednesday, the new remuneration structure is based on the benchmarking done by the company, keeping in mind good governance practices and companies in similar sectors or types of business with similar market capitalisation.

This decision also reflects the board members’ commitment towards ensuring that the company remains financially prudent, as it works towards its intended path of profitability.

Paytm is also seeking shareholder approval on appointment of former Indian Revenue Services officer, Rajeev Krishnamuralilal Agarwal to its Board.

The company is also seeking shareholder approval on reappointment of Ravi Chandra Adusumalli, Founder and co-Managing Partner of Elevation Capital to its board of directors, who is set to retire by rotation. Elevation Capital was one of the initial backers of Paytm. With the proposed changes to its Board, Paytm reinforces its commitment to maintain the highest standards of corporate governance.

Recently, brokerage firm Bernstein provided strategic recommendations for Paytm to maximize its value, emphasising mergers and acquisitions as the most viable options. With regulatory obstacles potentially diminishing, Bernstein proposes that Paytm's optimal path to recovery involves merging with a bank or a sizable non-banking financial company (NBFC) to revitalize its operations and position in the market.

Bernstein's report indicated that a potential merger between banks and Paytm has the capacity to unlock the vast customer base of Paytm, fostering innovation and expansion in the financial domain. The report underscores the opportunity for Paytm to broaden its product range by collaborating with a bank, introducing inventive credit services, and utilizing its well-established distribution channels to enhance consumer experiences.

Additionally, the report suggests an alternative approach for Paytm, wherein a substantial investment from a prominent corporate entity could potentially revitalize its operations swiftly. This strategic move may help navigate potential regulatory hurdles in the future, enabling Paytm to reposition itself in a fiercely competitive market landscape.

Earlier this year, the RBI barred Paytm Payments Bank (PPBL) from accepting fresh deposits and doing credit transactions after February 29, which was later extended to March 15. There were notable disruptions in operations following this, which resulted in a continuous increase in financial losses.

One 97 Communications Ltd shares closed today at Rs 573.8, up by 0.18% from Rs 572.75 on Tuesday.