With a view to reward its staff and also attract and retain new talent, private sector Dhanalakshmi Bank has introduced an Employee Stock Option Plan (ESOP) for its employees.
The bank has formed an ESOP Trust and will grant six per cent of the bank's share capital to the Trust.
"We have received our Board approval to grant 6 per cent of the bank's equity capital to the Trust which will act as custodian and allot ESOPs as per the recommendations of the Compensation Committee of the Board," Dhanalakshmi Bank's Managing Director & CEO, Amitabh Chaturvedi, told PTI here today.
"Most regulatory approvals have been obtained," he added.
All employees who were on the rolls of the bank as on December 31, 2008, and a few select ones who have joined the bank after that date would be eligible for the ESOPs, Chaturvedi said.
"The logic is to reward old employees for their seniority and association with the bank. For new employees who have taken a big career call by joining the bank, in some cases by taking a salary cut, it will be a sort of compensation for them," the Dhanalaksmi Bank chief said.
To facilitate subscription of the options, the bank will fund the Trust to acquire the ESOP grant of 6 per cent by way of loan. The grant price of ESOP will be market-linked and hence will have no impact on the bank's profit structure, Chaturvedi said.
The price, as per the Sebi formula, is Rs 118.55, he said.
While for new employees, there will be a lock-in period of three-years, the vesting period has been made lucrative for old employees. They can get 30 per cent shares each in the first and second year and the remaining 40 per cent in the third, he said.
Going forward, all ESOP allocations will based on performance.
"Presently, ESOP is for past association with the bank but in future, it will be performance-based, Chaturvedi said.
