KOCHI: The South Indian Bank (SIB) has approved granting 8,66,738 employee stock options (ESOPs) to its Managing Director and CEO, P R Seshadri, under the 17th tranche of the SIB Employee Stock Option Scheme (SIB ESOS) – 2008.
ESOP was approved at a board meeting held on November 29. The move is in line with the Reserve Bank of India’s (RBI) guidelines on non-cash variable pay for key executives and the terms of Seshadri’s appointment approved by shareholders.
The options are priced at Rs24.03 per share, based on the NSE’s closing price on November 28, 2024, the trading day with the highest volumes prior to the grant approval. The pricing and number of options granted have been determined using the Black-Scholes option pricing model, in compliance with RBI norms.
Fixed Pay vs variable pay
Unlike fixed pay, which constitutes a guaranteed monthly or annual salary, variable pay is performance-linked and incentivises key management personnel to align their actions with shareholder value creation. In this case, Seshadri’s ESOPs form part of his variable pay, rewarding him for contributing to SIB’s long-term growth.
The granted ESOPs will vest in tranches such as 30 per cent after 12 months, another 30 per centafter 24 months, and the remaining 40 per cent after 36 months from the grant date. Seshadri will have five years from the vesting date to exercise the options.
SIB’s ESOP programme
Launched in 2008, the SIB ESOS scheme aims to align employee interests with shareholder returns while incentivizing sustained performance. Over the years, the scheme has benefited key personnel, enabling them to participate in the bank’s equity growth.
“The approval of Seshadri’s ESOPs underscores the bank’s commitment to attracting and retaining top talent while adhering to governance standards set by the RBI and shareholder expectations,” a source close to the bank told businessbenchmark.news.
