IIAS opposes Ujjivan SFB RSU plan over disclosure concerns

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

The bank sought shareholders' approval for the Ujjivan RSU Scheme-2026, which will result in a 1% dilution on the expanded capital base, with up to 20 RSUs proposed to be granted to the senior leadership.

An RSU is a type of equity compensation granted by employers at a future date, instead of offering the actual shares immediately.


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

The vesting of RSUs should also be subject to continued employment with the bank, it said.

Responding to the observations, the bank said that each vesting shall occur only if the bank achieves not less than 105% of its budgeted revenue and profit targets, as approved by the board.

"We hereby also confirm that once the bank satisfies the first condition of vesting -- achieving 105% of its budgeted revenue and profit targets -- individual performance rating should at least “meets expectations” and above, to be eligible for getting these RSUs vested,' the bank said in a stock exchange filing.