This logic is flawed. Options are not meant to be at the prevailing market price UNLESS the holders intend to exercise it immediately, in which case they could have got it from the open market. They obviously intend to hold it till Mar-15, and exercise it when the price jumps over Rs 13.
Now, these options were exercisable within 5 yrs viz Mar-2015. But evidently, the directors and employees are in a hurry to cash out. Poetic justice perhaps further reduced the share price to Rs 8 as of today, so will they pass another resolution to reduce the exercise
So how much are they profiting from this?
- The 4 non executive directors are having 1 million ESOPs reprices=>a benefit of Rs 17.4 million.
- Other key employees are having 3,51,550 ESOPs repriced=> a benefit of Rs 6.2 million.
Granted that this is subject to confirmation by shareholders but I wonder how did
- The compensation committee(all the said Non Executive directors) vote itself options repricing)?
- The nominee institution directors agree to this?(maybe because this saves an monetary outflow)?
- They ever think of seeking 'post facto' approval and seeking fait accompli.