YES Bank to expand ESOP pool to 225 mn shares, fix MD-CEO pay at Rs 2.8 cr

Lender is yet to hear RBI on CEO's variable compensation

YES Bank is planning to enhance the pool of shares offered in the Employee Stock Option Plan (Esop) to 225 million from the present 75 million, in order to incentivise and retain employees, and to tackle poaching by peers.
 

The private lender has also proposed fixed remuneration of Rs 2.84 crore (annual) for MD and CEO Prashant Kumar (pictured), according to a notice for the virtual annual general meeting (AGM) slated for September 10 via videoconferencing.
 

The components of fixed remuneration include basic salary of Rs 45 lakh per annum, other allowances of Rs 1.05 crore, and perquisites and retirement benefits (PF and gratuity).
 

The RBI has approved of the fixed remuneration for MD and CEO, and will send a separate communication regarding variable pay. The MD and CEO compensation — comprising fixed and variable pay — is in line with RBI norms on compensation for top managers, including whole-time directors/CEOs of private sector lenders, said the bank.

YES Bank has also proposed a salary of Rs 25 lakh per annum plus perquisites to Sunil Mehta, non-executive chairman of bank.

On expansion of the ESOP pool, the bank said it had granted options under the said scheme and the balance was nearing exhaustion.
 

Fresh infusion into the Esop pool was required for hiring and retaining critical talent, which needs to be ring-fenced to avoid poaching by competitors.

The enhancement in the Esop pool is in no way any guarantee of allotment of Esop, but merely an enabling provision.

The actual grant would be subject to performance of the bank, its business units, as well as individual and other regulatory norms.

The lender has faced multiple challenges in the last few quarters, because of which it is necessary to keep employees motivated and make them a partner in the initiative to bring the bank back to normalcy.
 

Further, the RBI’s revised norms (November 2019) on compensation to top managers mandates at least 50 per cent of the variable pay to be in the form of Esops or stock-linked instruments.
 

Consequently, the lender will need to maintain an adequate Esop pool to implement the revised compensation structure.