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Moolah time for staff as Infosys Esop matures

K Giriprakash

The first and biggest employees' stock option plan by an Indian software company has matured with the lock-in of Infosys Technologies' 1994 Esop ending last week giving eligible employees the option to convert it into hard currency.

As per current stock prices, 1,22,200 equity shares on which the lock-in has expired will amount to a cool Rs 477 million for 1,525 eligible employees. A year ago, the same number of shares would have fetched double the price. Hence, these employees might just wait for better days ahead to exercise their options.

A notice to the Bombay Stock Exchange said: "Infosys Technologies Ltd has informed BSE that the lock-in on 1,22,200 equity shares of Rs 5 per share as adjusted for the company's two-for-one stock split in February 2000, granted under the 1994 employees stock offer plan, has expired effective August 23, 2001.

Accordingly, these equity shares shall be freely tradable on the exchange after August 23, 2001."

"It is the largest vesting to take place since Infosys floated Esops for its employees," an Infosys spokesperson told Business Standard. The lock-in period for these Esops was five years and it came to an end on August 23, 2001.

In 1994, the company instituted a employees' stock offer plan for all eligible employees. Under the plan, warrants were transferred to employees deemed eligible by the advisory board constituted for the purpose. Each warrant, issued at Re 1, entitled the warrant holder a share at an exercise price of Rs 99.

Infosys has so far floated three stock offer plans -the 1994, 1998 and 1999 plan. The number of existing employees offered stock options under these plans is 9,767.

For the 1998 plan, the compensation committee of the company administers the plan, which is effective for 10 years. It determines the exercise price for the American depository share-linked stock option, which will not be less than 90 per cent of the fair market value on the date of grant. A total of 801 employees were granted options.

The 1999 plan provides for the issue of 66,00,000 equity shares to the employees. The number of employees granted options was 9,736.

One of the largest shareholders in Infosys is its chairman NR Narayana Murthy who also continues to be the largest distributor of wealth to his shareholders, with the stake beneficially owned by him in the company being 7.42 per cent.

The total percentage of stakes held by all the founding members, including Murthy, is 29.16 per cent. Infosys managing director Nandan M Nilekani holds 5.04 per cent of the shares.

Among the other founding members of the company, Dinesh K holds 3.52 per cent of the shares, Kris Gopalkrishnan holds 4.81 per cent, Shibulal SD 3.2 per cent while NS Raghavan, who retired last year, holds 5.17 per cent.

Shares beneficially owned by the directors include the equity shares owned by their family members to which such directors disclaim beneficial ownership. Beneficial ownership is determined in accordance with rules of the SEC and includes voting and investment power with respect to such shares.

According to the latest annual report of Infosys Technologies, 77,725 shareholders (nearly 87 per cent) hold between one and 100 shares but their holdings account for 1.53 per cent, while 433 shareholders (0.48 per cent) hold around 80 per cent of the shares.

During 2000, around 74.63 per cent of the total number of shareholders held equity shares between 1 and 100.

The next largest group of shareholders, who constitute 8.74 per cent, hold between 1,001 and 5,000 shares.

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