Paytm's Problems Hit Board Members' Salaries, EGM Soon

Paytm, facing headwinds in its financial performance, is taking steps to rein in expenses, including a proposed reduction in remuneration for its board members. This move comes ahead of the company's annual general meeting (AGM) scheduled for next month, where shareholders will vote on the new compensation framework.

Paytm's Revised Compensation Structure

Under the proposed structure, the annual compensation for 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 tied to attendance at meetings and leadership roles within board committees, promoting accountability and active participation.

Paytm Plans to Cut Directors' Salaries 

This change represents a significant reduction for some board members. Previously, directors like Ashit Ranjit Lilani earned an annual salary of Rs 1.65 crore, while Gopalasamudram Srinivasaraghavan Sundararajan received Rs 2.07 crore.

Why Paytm is Cutting Salaries?

Paytm states that the revised remuneration structure is based on industry benchmarking and aligns with good governance practices. The company has taken into account the compensation levels of similar companies in its sector and with comparable market capitalisation.

The new remuneration structure, if approved by shareholders, will be effective from April 1, 2024.

Paytm's Internal Turmoil 

This move to cut board member salaries reflects the broader challenges Paytm is facing. The company has been grappling with profitability concerns and intense competition in the digital payments space. By reducing expenses, including board member compensation, Paytm aims to demonstrate financial discipline and improve its bottom line.

Paytm's EGM

The upcoming extraordinary general meeting (EGM) will likely see shareholders closely scrutinise the proposed remuneration changes. While the move may be seen as a positive step towards fiscal responsibility, some shareholders may question whether it goes far enough to address the company's underlying issues.

Paytm's decision to reduce board member salaries highlights the company's efforts to navigate a challenging business environment. The proposed changes, if approved, will signal a shift towards greater financial prudence and corporate governance. The upcoming EGM will be a crucial test of shareholder sentiment and their confidence in the company's ability to overcome its current challenges.