ICICI Bank 2012 Annual Report Download - page 99

F21
6. Preference shares
Certain government securities amounting to ` 2,578.1 million at March 31, 2012 (March 31, 2011: ` 2,563.8 million) have
been earmarked against redemption of preference shares issued by the Bank, which fall due for redemption on April 20,
2018, as per the original issue terms.
7. 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% 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 for fiscal 2003 and earlier years vest in a graded manner over a three-year period, with
20%, 30% and 50% of the grants vesting in each year commencing from the end of 12 months from the date of grant.
Options granted from fiscal 2004 vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the
grants vesting in each year commencing from the end of 12 months from the date of grant. Options granted in April 2009
vest in a graded manner over a five year period with 20%, 20%, 30% and 30% of grant vesting each year, commencing
from the end of 24 months from the date of grant. Options granted in September, 2011 vest in a graded manner over a
five years period with 15%, 20%, 20% and 45% of grant vesting each year, commencing from the end of 24 months from
the date of the 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. As per the scheme, the exercise price of ICICI 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 was no
compensation cost based on intrinsic value of options.
In February, 2011, the Bank granted 3,035,000 options to eligible employees and whole-time Directors of ICICI Bank and
certain of its subsidiaries at an exercise price of ` 967. Of these options granted, 50% would vest on April 30, 2014 and
the balance 50% would vest on April 30, 2015. The options can be exercised within 10 years from the date of grant or
five years from the date of vesting, whichever is later. Based on intrinsic value of options, compensation cost of ` 21.0
million was recognised during the year ended March 31, 2012 (March 31, 2011 ` 2.9 million).
If ICICI Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended
March 31, 2012 would have been higher by ` 1,816.1 million and proforma profit after tax would have been ` 62.83
billion. On a proforma basis, ICICI Bank’s basic and diluted earnings per share would have been ` 54.52 and ` 54.37
respectively. The key assumptions used to estimate the fair value of options granted during the year ended March 31,
2012 are given below.
Risk-free interest rate ................................................................................................................... 7.99% to 9.07%
Expected life ................................................................................................................................ 6.35 to 6.98 years
Expected volatility ....................................................................................................................... 47.53% to 49.20%
Expected dividend yield .............................................................................................................. 1.26% to 1.60%
The weighted average fair value of options granted during the year ended March 31, 2012 is ` 592.52 per option
(March 31, 2011: ` 535.87).
A summary of the status of the Bank’s stock option plan is given below.
` except number of options
Stock options outstanding
Year ended March 31, 2012 Year ended March 31, 2011
Particulars Number of
options
Weighted
Average
Exercise Price
Number of
options
Weighted
Average
Exercise Price
Outstanding at the beginning of the year .......................... 20,529,387 779.72 18,763,460 689.50
Add: Granted during the year ............................................. 4,060,600 1,104.82 5,514,600 972.00
Less: Lapsed during the year, net of re-issuance1 ............... 448,372 798.77 1,005,536 871.95
Less: Exercised during the year ......................................... 942,070 510.94 2,743,137 517.21
Outstanding at the end of the year ...................................... 23,199,545 846.94 20,529,387 779.72
Options exercisable ............................................................. 12,019,655 745.26 10,197,137 682.72
In terms of the Scheme, 23,199,545 options (March 31, 2011: 20,529,387 options) granted to eligible employees were
outstanding at March 31, 2012.
forming part of the Accounts (Contd.)
schedules