While SKS Microfinance, India’s first MFI firm to hit the public markets, delivered a bumper harvest to its investors (Sequoia Capital made a part-exit), the real winners could be its employees who have seen some real money by encashing their stock options.
This kind of money in an industry, where middle and senior management salaries are at least 20-30% below mainstream sectors (such as banks and insurance), may turn the interest of many who believe in the social sector but are often constrained by its earning potential.
The SKS IPO success has resulted in some serious cash for its mid-tier employees holding stock options with many of them earning millions in local currency. Apart from the senior rank professionals at SKS, even junior staff like loan officers and branch officers (who typically get an income of Rs 1-2 lakh per annum) are believed to be richer by several multiples and some of these employees belong to far-flung areas such as Medak and Warangal (Andhra Pradesh), Lakhisarai (Bihar), Bolangir (Orissa), Sasaram (Bihar) and Bokaro (Jharkhand). Nearly 5,000 employees in SKS hold stock options that were issued at various stages and at different prices.
In what is reminiscent of the IT boom period that created millionaires of even support staff working with firms that later turned giants like Infosys (in the process kicking off the ESOP cult in the country), many employees earned lakhs by selling all or some of their shares converted from ESOPs as the SKS Microfinance scrip leapt soon after listing on the local bourses.
As the CEO of a peer MFI (which is VC-backed) says, “Now our employees are beginning to see value in their stock options. That is what has happened post SKS.” “MFIs not necessarily can pay very high salaries. If we can attract top talent with Esops, a lot of people can see value in it,” says Samit Ghosh, CEO of Ujjivan, an urban-based MFI. Ujjivan has 3,500 employees of which at least one-third hold Esops. Ghosh adds, “I worked for 30 years in banking. So it was more of a personal reason for me to shift to MFI. But, for mid-career professionals who opt for this sector early in life, they do have financial obligations and aspirations. MFIs have to match that or at least come close to that.”
SKS Microfinance scrip has been trading at around 20% premium to the issue price of Rs 985. In total, employees are estimated to have sold shares worth over Rs 10 crore within a week of listing of shares. It is learnt that the CXO level (CEO, CFO and COO) at SKS have a lock-in period of three years. Most employees were issued ESOPs under the company’s 2007 stock compensation scheme.
Talking to VCCircle, SKS chief operating officer M R Rao said, “Stock options are typically awarded to senior and middle management, as part of the recruitment package, during promotions and also as performance-based incentives.”
According to stock exchange disclosures, some of them who made the most include Mamta Bharadwaj, vice president marketing and communication (Rs 1. 28 crore); senior principal manager P V Kalyana Chakarvarthy (Rs 43 lakh); SRM-MS Anil Kumar Singh (Rs 61.32 lakh); senior zonal manager Rashmi Singh (Rs 59.03 lakh); senior lead manager-member services Balamraju Subbaraju (Rs 55.39 lakh); senior zonal manager A Gopalkrishna (Rs 61.8 lakh) besides AVP-IT, Srikanth Apanna (Rs 84.24 lakh).
Those encashing over Rs 10 lakh (Rs 1 million) from their ESOP converted shares include account manager Sandeep Dutta who sold all his shares for Rs 16.73 lakh, principal manager P S Srinivasu (Rs 16.43 lakh), lead manager Uma Shankar Mahakur (Rs 15.5 lakh), manager Santosh Kumar Singh (Rs 11.9 lakh).
Most employees have not sold all their shares within the first week of the listing of the scrip. In fact some like Pingali Seshagiri, AVP (Audit), and Pradeep Kalra, chief information officer, continue to hold shares worth over Rs 1 crore after partial selloff. Kalra, in particular, is sitting on a neat sum having joined SKS just about a year back after working as CTO of Yes Bank for three-and-a-half years.