One is not disappointed by the details pulled out in this regard! To the credit of the Bank, the availability and the accessibility of these is very much commendable.
What one can make out of this is for each reader to figure out. The idea is not to reach any conclusion as much as to collate the information which a few may find to be interesting, if not intriguing!
ICICI Bank appears to have had a stock option system since the beginning. However, up to the financial year ending (FYE) 31 March 2007, the notes in the annual reports provide only limited information, especially the period of exercise, after the vesting of the options.
For the first time, the annual report for FYE March 2008 states that the options once vested can be exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later.
Little changed in the operation of the scheme for the following seven years, till FYE13-14.
In the period relevant to FYE 31 March 2015, while the exercise period is not altered, the vesting of a block of 50,000 options alone out of the options granted in April 2014 was given an accelerated vesting of 50% on 30 April 2017 and 50% on 30 April 2018.
In respect of options granted prior to April 2014, the vesting happened after a 24-month period and in five annual tranches of the specified proportion mentioned.
In April 2014, the method was changed to start the vesting after 12 months from the date of grant and the period was reduced to three years with a fixed proportion each year.
A further exception was made for the aforementioned 50,000 options with a different vesting formula.
Yet another exception in the period of vesting for a particular lot of options issued in September 2015. This again vested at 50% each in two years.
Come April 2016, the exercise period, which, since inception, was 10 years from the grant date and five years from the vesting date, was changed to 10 years from the vesting date. Clearly, the period was elongated by five full years.
In June 2017, the exercise period was further changed to provide discretion to the board governance, remuneration and nomination committee in respect of the exercise of options.
Before the lapse of one year from the previous change, the exercise period was shrunk to five years from the date of vesting, making it the most restricted exercise period since the inception of the scheme.
After the above tinkering almost at frequent intervals, the scheme has been operating without any modification till now.
It is possible that each of the changes listed above has nothing to do with any specific individual or situation but was based on rational and well-thought-out reasons and logic.
Yet, it is difficult to find any parallel either among private banks or other companies that kept modifying the stock option features so frequently and that too all within a limited span of about four years.
The Bank may think this is much ado about nothing and may remain mute and not feel the need to react.
A sensitive organisation that handles lakhs of crores of public money should actually feel more accountable to share the actual reasons and the consequences of these changes to live up to the trust of all its stakeholders.
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(Ranganathan V is a CA and CS. He has over 43 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as senior advisor post-retirement handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)
