Former ICICI Bank managing director (MD) and chief executive officer (CEO) Chanda Kochhar has so far not abided by the order of the bank to return the money she had got as bonus and the stock options between April 2009 and March last year.
Sources say Kochhar is yet to pay back despite reminders.
The bank board on January 30 said it would claw back all the perks she got. This followed a report by a probe panel, headed by former Supreme Court judge B N Srikrishna, which indicted Kochhar for allegedly violating the bank’s code of conduct in the Videocon loan case. Initially, the private lender is learnt to have sent a few reminders but later, sometime in May, when Kochhar had communicated to the bank about her objections on treating her resignation as termination, the bank did not pursue the matter, said a source privy to the development.
The source added the bank might take up the matter with the regulators, including the Reserve Bank of India (RBI) and Securities and Exchange Board of India, and seek their intervention. An email sent to ICICI Bank did not elicit a comment. Text messages to Kochhar remained unanswered. Kochhar was directed to return about Rs 10 crore in cash bonuses she had received as CEO, and also give up close to 6 million shares of the bank she had as stock option, which was about Rs 350 crore (when the bank board issued the directive).
However, she did not exercise all the stock options over the nine years of her tenure.
“A certain amount has been exercised and acquired by her but it is not clear yet how many of those options had been exercised and vested, and how many are yet to be vested,” said the source.
Soon after the board’s decision, the private lender had clarified it would revoke her existing and future entitlements, including unpaid amounts, unpaid bonuses, vested and unvested stock options, and even medical benefits.
According to the RBI’s compensation guidelines of 2012, a clawback is an agreement between an employee and the bank in which the employee agrees to return previously paid or vested remuneration to the bank.
ICICI Bank, too, has provisions for a clawback, according to a copy of its 2018 compensation policy available on its website. It says employees will be required to sign clawback agreements on variable pay. In a clawback arrangement, “the employee will agree to return, in case if it is asked for, the previously paid variable pay to the bank in the event of an inquiry determining gross negligence or integrity breach, taking into account relevant regulatory stipulations,” it said.
Experts are of the opinion that this may not be a critical matter for her because there could be criminal charges against her.
Another view is that the bank’s agreement with Kochhar may not envisage any clawback. In that case the bank has to approach court, another expert said.―Business Standard