Private sector lender YES Bank will enhance pool of share in Employee Stock Option Plan (ESOP) to 225 million shares from 75 million to grant them to employees, to attract and retain its executives and ensure they avoid poaching.

It also proposed the fixed remuneration of Rs 2.84 crore a year for its managing director and chief executive Prashant Kumar, according to the notice for Annual general Meeting of shareholders slated for September 10. The AGM is to be held through video-conferencing/other audiovisual means.

The components of fixed remuneration include basic salary of Rs 45 lakh per annum, other allowances of Rs 1.05 crore, perquisites and retirals (PF & Gratuity), and other benefits.

RBI has approved the fixed remuneration for the MD & CEO and would send a separate communication on variable pay. MD & CEO compensation, which comprises fixed pay and variable pay, was in alignment with RBI guidelines on compensation of top managers, including whole-time directors/CEOs of private banks, the lender said.

It has also proposed salary of Rs 25 lakh per annum plus perquisite to Sunil Mehta, non-executive chairman of bank.

Elaborating on expanding the ESOP pool, the bank said it has granted options under the said scheme and the balance is nearing exhaustion. A fresh infusion into the ESOP pool was required for the purpose of hiring and retaining critical talent that needs to be ring-fenced to avoid poaching by the competition and other organisations.

The ESOP pool scheme consists of the existing pool of 75 million equity stock options plus proposed 105 million equity stock options, taking the total ESOP pool to 225 million equity stock options.

The enhancement in the ESOP pool was in no way any guarantee of allotment of ESOP and is merely an enabling provision. The actual grant of ESOPs would be subject to the performance of the Bank, Business unit and the individual and other regulatory norms.

The bank has faced multitude of challenges in the last few quarters including the ongoing global Covid-19 impact. In this phase of the bank life cycle, it is imperative that the employees continue to remain motivated and partner in initiatives to bring the Bank back to normalcy and accelerate its growth.

Also, RBI’s revised norms (November 2019) for compensation to top managers requires that at least 50 per cent of the variable pay should be in the form of ESOP or Stock linked instruments. Hence, the Bank will need to maintain an adequate ESOP pool to implement the revised compensation structure year on year.