State Bank mulls stock option for employees

Published - September 11, 2014 12:18 am IST - MUMBAI:

Arundhati Bhattacharya

Arundhati Bhattacharya

State Bank of India (SBI) Chairperson Arundhati Bhattacharya, on Wednesday, said that the bank was planning to issue Employees Stock Option Plan (ESOP) this year. However, it would be linked to ‘performance parameters’. “We are now considering an ESOP, which is basically something where you give an option and they exercise the option at a later date depending upon what is the share price in the market. So, we are looking at that ESOP scheme,” said Ms. Bhattacharya.

Earlier, the bank was planning to issue Employees Stock Purchase Scheme (ESPS), which is a share purchase scheme. “At that point, SBI’s shares were at a very low price,and it would have made sense. Since then, prices have improved, and it is difficult for our employees to purchase this,’’ she said.

However, she said that it would be linked to certain performance parameters. “If you perform as per the target given to you, then you will get a certain number of options, which will be locked in for a period of time, say one year. And then subsequent to that one year, you will exercise the option if you find the value has gone up. If it hasn’t gone up, you can allow it to lapse,” she said, adding, “If it hasn’t gone up that means you have not worked hard enough for the company. So, to make it go up, you have to work hard.”

“My intention is to make it available to all. I think we all need to work as one team. Therefore, it would be nice if we can give it to everybody. But we have to find out performance parameters for every job. That is a big job. So, we are looking at how that can be done,” said Ms. Bhattacharya.

“We will try to roll it out as quickly as possible. In principle, the ministry is agreeable. And, we have to take permissions from others, including RBI, as well,” she added.

However, she declined to comment on a stock-split. She quipped: “How do you know we are not doing it? These are things that we will do when we think the time is right. And, we know that the amount (stock price) now is really too big. So, we will see…………..This is price- sensitive information. I can’t say yes or no.”

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