Equity Final
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Equity Final Presentation Transcript

  • 1.  
  • 2.
    • SHASHI B. SINGH B-69
  • 3. Equity compensation plan or a stock option is the opportunity, given by the employer, to own a certain number of shares of the company's common stock at a pre-established price, known as the grant price, over a specific period of time, known as the vesting period.
  • 4.
      • Equity as an asset is a time tested tool that provides one of the best opportunities for wealth creations
      • Equity as a mode of compensation is cost effective for employer
      • In the sprit of a true partnership the value created is shared
  • 5.
    • Attraction and retention of talent for positions of substantial responsibility
    • Creates commonality of interest between employees and shareholders
    • Provides great incentive and motivation to employees
    • Offers most tax efficient compensation for employees
  • 6.
    • Covers companies which are
        • Listed in a recognized stock exchange in India – Recognized by SEBI
        • Listed in a recognized stock exchange outside India – Recognized by similar regulatory authority
        • Unlisted domestic company.
      • Subsidiary or holding company of a company referred above.
  • 7.
    • Persons covered
      • Permanent employee of the company. (Inferred to include parent / subsidiary)
      • Whole-time directors.
      • Non-whole time directors.
    • Persons not to be covered
      • Employee who is a promoter or belongs to the promoter group.
      • A director (directly or indirectly) holds more than 10% of the outstanding equity shares of the company.
  • 8.
      • Grant of rights to purchase company shares at future date
      • Employees have an option but no obligation
      • Price is predetermined
      • Price can be fair value (FV) based or at discount to FV
      • Vesting period can be flexible – minimum statutory period of 12 months
  • 9.
    • Appropriate for small companies where future growth is expected.
    • For publicly owned companies who want to offer some degree of company ownership to employees.
  • 10.
    • How much stock a company be willing to sell?
    • Who will receive the options?
    • How many options are available to be sold in the future?
    • Is this a permanent part of the benefit plan or just an incentive?
  • 11. Right to purchase shares. Price is predetermined. Not shareholders,no votes Vesting ceases when employee leaves.
  • 12.
    • There are three types of stock options
    • Incentive stock options ("ISOs")
    • Non-qualified stock options ("NQSOs")
    • Restricted Stock Options Plans.
  • 13.
    • Based on exercise price.
    • There is no tax to the option holder.
    • May be subject to alternative minimum tax.
    • Based on Fair Value.
    • There is tax to be paid.
    • Tax is paid on the difference of price.
  • 14.
    • Stocks held by founders.
    • If founder leaves, these stocks are forfeited.
    • It acts as motivation for founders.
    • Voting and other rights of stockholders.
    • Subject to a repurchase right by the company.
  • 15.
    • Advantages
    • Allows a company to share ownership with the employees.
    • Used to align the interests of the employees with those of the company.
  • 16.
    • Disadvantages
    • In a down market,they quickly become valueless
    • Dilution of ownership
  • 17.
    • Excellent way to reward key executives.
    • A tax saving compensation plan
    • Helps in attracting & retaining talented employees
    • Sense of ownership is created
    • Great tool for motivation of employees
  • 18. At a Glance…..
  • 19.
    • 1981: Infosys is established by N. R. Narayana Murthy and six engineers in Pune, India, with an initial capital of US$ 250. Signs up its first client, Data Basics Corporation, in New York
    • 1983: Moved its headquarters to Bangalore, the capital of Karnataka
    • 1987: Opens first international office in Boston, US
    • 1992: Opened its first overseas sales office in Boston.
    • 1993: Became a public limited company in India with an initial public offering of Rs. 13 crores .
    • 1999: First Indian company to be listed on Nasdaq on March 11.
  • 20.
    • 2002: Business World named Infosys "India's Most Respected Company".
    • 2002: Started its BPO (business process outsourcing) subsidiary
    • 2003: Acquired 100% equity of Expert Information Services Pvt Limited, Australia (Expert) and changed the name to Infosys Australia Pvt Limited.
  • 21.
    • 2006: August 20, N. R. Narayana Murthy retired from his position as the executive chairman.
    • 2006: Acquired the 23% stake Citibank had in its BPO making it a wholly owned subsidiary of Infosys and changed the name to Infosys BPO Ltd.
    • 2006: December, became the first Indian company to make it to Nasdaq-100
    • 2007: April 13, Nandan Nilekani stepped down as CEO and made way for K. Gopalakrishnan to occupy his chair effective June 2007
  • 22.
    • 2007: July 25, Infosys bags multi-million dollar outsourcing contract with Royal Philips Electronics in the area Finance & Accounting services strengthening its European operations.
    • 2008: Agreed to buy British consultancy Axon Group for 407 million pounds ($753 million), but HCL Technologies outbid Infosys for 441 million pounds. However, Infosys gained Rs. 180 million from the failed Axon bid.
  • 23.
    • Infosys Stock Option Plans
    • Infosys has so far floated three stock offer plans -the 1994, 1998 and 1999 plan
  • 24.
    • The first and biggest employees' stock option plan
    • Objective- generate cash for the employees.
    • It had a lock in Period of Five Years.
    • Date of Expiry: 23 August 2001
  • 25.
    • No of Equity Shares: 1,22,200
    • No of Employees: 1,525
    • Total value of shares after lock in period: 477 millions.
  • 26.
    • In !998 Plan the duration was for 10 years.
    • Stock Option was issued at 90 percent of the fair market value.
    • Eligible employees: 801
  • 27.
    • 66,00,000 equity shares was issued to the employees.
    • No of Eligible employees: 9,736
  • 28.
    • Each Infosys employee worth Rs 97 lakh!
    • 2009
    • Each employee at Infosys Technologies is worth as much as Rs 97 lakh, mainly based on the potential value of his/her future earnings.
    • The IT major's total value of human resources, which includes both software professionals and support staff, is pegged at Rs 1,02,133 crore for the fiscal ended March 2009.
    • According to the company's annual report, the human resources' value of Rs 1,02,133 crore during fiscal 2009 was for 1,04,850 employees during the same period.
  • 29.