ICICI Bank 2010 Annual Report Download - page 110

F30
9. Employee Stock Option Scheme (ESOS)
In terms of the ESOS, as amended, the maximum number of options granted to any eligible employee in a financial year
shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all such
options granted to the eligible employees shall not exceed 5.0% of the aggregate number of the issued equity shares of
the Bank on the date(s) of the grant of options. Under the stock option scheme, eligible employees are entitled to apply
for equity shares. Options granted in April 2009 vest in a graded manner over a five year period with 20.0%, 20.0%, 30.0%
and 30.0% of grant vesting each year, commencing from the end of 24 months from the date of grant. The options can be
exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later. No options have
been granted to wholetime Directors for fiscal 2009.
In terms of the scheme, 18,763,460 options (March 31, 2009: 18,992,504 options) granted to eligible employees were
outstanding at March 31, 2010.
As per the scheme, the exercise price of the Bank’s options is the last closing price on the stock exchange, which recorded
highest trading volume preceding the date of grant of options. Hence, there is no compensation cost for the year ended
March 31, 2010 based on intrinsic value of options. However, if the Bank had used the fair value of options based on the
Black-Scholes model, compensation cost for the year ended March 31, 2010 would have been higher by Rs. 901.2 million
and proforma profit after tax would have been Rs. 39.35 billion. On a proforma basis, the Bank’s basic and diluted earnings
per share would have been Rs. 35.33 and Rs. 35.19 respectively. The following table sets forth, the key assumptions used
to estimate the fair value of options granted during the year ended March 31, 2010.
Risk-free interest rate .......................................................................................... 6.53% to 7.76%
Expected life ....................................................................................................... 6.35 to 6.85 years
Expected volatility ............................................................................................... 48.65% to 49.18%
Expected dividend yield ...................................................................................... 1.22% to 2.53%
The weighted average fair value of options granted during the year ended March 31, 2010 is Rs. 199.91 (March 31, 2009:
Rs. 331.19)
The following table sets forth, for the periods indicated, summary of the status of the Bank’s stock option plan.
Rupees, except number of options
Particulars
Stock option outstanding
Year ended March 31, 2010 Year ended March 31, 2009
Number of
options
Weighted
Average
Exercise Price
Number of
options
Weighted
Average
Exercise Price
Outstanding at the beginning of the year ...................... 18,992,504 685.05 15,638,152 596.32
Add: Granted during the year ........................................ 1,731,000 434.78 5,640,500 912.30
Less: Lapsed during the year ........................................ 365,372 661.78 1,723,001 737.40
Less: Exercised during the year ................................... 1,594,672 366.38 563,147 336.96
Outstanding at the end of the year ................................ 18,763,460 689.50 18,992,504 685.05
Options exercisable ....................................................... 10,104,780 609.18 7,188,420 496.10
The following table sets forth, summary of stock options outstanding at March 31, 2010.
Range of exercise price
(Rupees per share) Number of shares arising out of options
Weighted average
exercise price
(Rupees per share)
Weighted average
remaining contractual
life (Number of years)
105–299 ................................................................. 117,601 146.21 2.03
300–599 ................................................................. 9,339,639 462.04 6.08
600–999 ................................................................. 9,238,220 923.24 7.61
1,000–1,399 ........................................................... 68,000 1,114.57 7.65
The options were exercised regularly throughout the period and weighted average share price as per National Stock Exchange
(NSE) price volume data during the year ended March 31, 2010 was Rs. 853.80 (March 31, 2009: Rs. 723.55).
The Finance (No. 2) Act, 2009 has abolished fringe benefit tax and introduced tax on the perquisite value in the hands of
the employees which is computed on the difference between the fair market value on date of exercise and the exercise
price with effect from April 1, 2009.
10. Preference shares
Certain government securities amounting to Rs. 2,405.2 million at March 31, 2010 (March 31, 2009: Rs. 2,356.6 million)
have been earmarked against redemption of preference shares issued by the Bank, which falls due for redemption on
April 20, 2018, as per the original issue terms.
schedules
forming part of the Accounts (Contd.)