IIAS Ujjivan opposes SFB RSU scheme

Institutional Investor Advisory Services, a proxy advisory firm, told investors that it does not support Ujjivan Small Finance Bank’s move to offer 20 million restricted stock units (RSUs) to the bank’s senior leadership at face value.

The bank sought shareholder approval for the Ujjivan RSU Scheme-2026, which will result in a 1% reduction on the expanded capital base, with a proposal to grant up to 20 RSUs to senior management.

RSUs are a type of equity compensation offered by employers at a future date, rather than offering actual shares immediately.

“In the absence of clarity on vesting of options, we do not support the resolution,” Institutional Investor Advisory Services said. It said that vesting of options should be performance-based, expecting detailed disclosure on weightage in terms of metrics, performance targets or a commitment to disclose such targets in the annual report after vesting.

Vesting of RSUs should also be subject to continuous employment with the bank, it said.

In response to the observations, the bank said that each vesting will take place only when the bank is not less than 105% of its budgeted revenue and profit targets, as approved by the board.

“We also hereby confirm that once the bank satisfies the first condition of vesting — achieving 105% of its budgeted revenue and profit targets — individual performance ratings of at least “meet expectations” and above, should be eligible to vest these RSUs,” the bank said in a stock exchange filing.