High Mark which desperately needs an injection of money to remain viable, had given four independent directors, including Vepa Kamesam, former deputy governor of RBI, and chairman Prof Anil Pandya 70% of ESOPs. The top management team which set up High Mark got just 30%. This team quit, leaving High Mark without an effective management team

High Mark Credit Information Services, one of the four credit information companies (CICs) in India licensed by the Reserve Bank of India (RBI), is not just under financial pressure but also facing crunch of key persons to manage its operations. According to sources, unequal distribution of shares under the employee stock ownership plan (ESOP) has made some of its top executives and key technocrats leave the credit bureau on which among other investors stock speculator Rakesh Jhunjhunwala has a stake.

In fact, High Mark's four independent directors, Dipankar Basu (1.63 lakh), Vepa Kamesam (1.63 lakh), Rajiv Johri (6.53 lakh) and Shyam Sunder Suri (6.53 lakh) and its chairman Prof Anil Pandya (3.27 lakh), together hold 70% of ESOPs. Of these, while Prof Pandya was designated executive chairman in position, if not in responsibilities, the other four directors have had little operating roles. And yet, the board allotted 1.9 lakh ESOPs to Kiran Moras, its senior vice-president and 2.7 lakh to Siddharth Das, its executive vice-president and chief operating officer. These options lapsed due to the resignation of both these officials. While Moras resigned on 21 March 2012, Das left High Mark on 20 March 2012.

High Mark’s total approved ESOPs were about 32.7 lakh, out of which 28 lakh were granted to independent directors, its chairman and other employees. As of 7 November 2012, about 4.66 lakh options lapsed. This means the credit bureau has 9.3 lakh options available for grant.

As Moneylife pointed out, the big bone of contention in High Mark was the generous salary, bonus, perks and stock options that the board has given to Prof Pandya when he has had little operating role. Apart from a salary package of Rs60 lakh a year in 2011, the chairman also got Rs4.27 crore as lump-sum compensation for past services including obtaining license from the RBI.

While other three CICs—Credit Information Bureau (India) Ltd (CIBIL), Experian Credit Information Company of India Pvt Ltd and Equifax Credit Information Services Pvt Ltd (ECIS)—have leading global credit bureaus as stakeholders and technology providers, High Mark preferred to develop its own technology and build systems accordingly.

High Mark has invested heavily over the past four years in creating competencies and technologies. The credit bureau has spent around Rs19 crore just for building its IT infrastructure and support systems.

Sachin Vyas, who was the chief technology officer (CTO), actually built the systems. Vyas while working with CapGemini headed a team that built loan systems for HSBC. However, according to sources, he also resigned from the company over differences with the chairman and allotment of ESOPs. Surprisingly, while Vyas resigned from High Mark in April, he was relieved only at the end of November 2012.

Bereft of a management team, High Mark is in a particularly tough spot because it does not have money either to run the operations beyond two months. It now appears strange that the RBI licensed High Mark at all to run a capital-intensive and long gestation business like a credit bureau, given how financially shaky and operationally mismanaged it has turned out to be. By all accounts the board of directors, who bagged the ESOPs for contributing little operationally, has remained unperturbed in the face of this raging crisis.