Case Study: Infosys

2. It has come to the notice of SEBI that some listed entities have been framing their own employees benefit schemes wherein Trusts have been set up to deal in their own securities in the secondary market, which was not envisaged within the purview of SEBI (ESOS and ESPS) Guidelines 1999. It is apprehended that some entities may frame such schemes with the purpose of dealing in its own securities with the object of inflating, depressing, maintaining or causing fluctuation in the price of the securities by engaging in fraudulent and unfair trade practices. Such dealing in the company’s shares by the Trusts may also raise regulatory concerns regarding compliance with SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 and SEBI (Prohibition of Insider Trading) Regulations, 1992

3. Case Study: Infosys • Infosys: Had two ESOP plans- 1998 plan and 1999 Plan but all the issued options have been exercised. Currently no outstanding ESOPs.

4. HCL • Employee Stock Option Scheme 2000 • the Board of Directors had • approved the grant of 30,18,000 options including the options • that had lapsed out of each grant. Each option confers on the • employee a right for five equity shares of ` 2/- each • Employee Stock Based Compensation Plan 2005 • The Shareholders of the Company have approved the • Employee Stock Based Compensation Plan 2005 through a • Postal Ballot for grant of 33,35,487 options to the employees • of the Company and its subsidiaries. The Board of Directors has • granted 31,96,840 options including the options that had • lapsed out of each grant. Each option confers on the employee • a right for five equity shares of ` 2/- each at the market price as • specified in the SEBI (Employee Stock Option Scheme and • Employee Stock Purchase Scheme) Guidelines 1999, on the • date of grant.

5. These • options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised • with in a maximum period of 5 years from the date of vesting. • The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

6. HCL ESOP • Two ESOP Plans: • Employee Stock Option Scheme: 2000 • Employee Stock Based Compensation Plan: 2005 • Total grant of 31,90,200 and 33,35,487 • Graded over a period of 42 and 60 months respectively • to be exercised with in a maximum period of 5 years from the date of vesting. • Each option of ` 10/- confers on the employee a right to five equity shares of ` 2/- each.

7. Fair value of stock option • Volatility: 31%-65% • Risk Free Rate:6.49% - 8.65% • Exercise Price: 178- 1348.25 • Time to maturity: 2.50-7 • Div Yield: 10%- 37% • Life of options: 10years • Fair Value of Options: 0.83 to 262.97

8. Employee Stock Option Scheme 2000 • Fair value of stock option • Volatility: 31%-68% • Risk Free Rate: 4.57% - 8.24% -Exercise Price: 202- 1271.25 • Time to maturity: 2.20-5.50 • Div Yield: 9%- 31% • Life of options: 8.5years • Fair Value of Options: 1.23 to 203.14

9. Equity Linked Debenture on HCl Underlying: HCL Technologies Ltd. (HCLTECH.BO) Closing Price: 3178.15 Tenor: 3yr Participation: Pricing: Interest Rate(3yr)= 6.50% Price of the zero coupon bond= 82.78% 3 year volatility = 28% (realized vol= 24% + hedge cost) Annual Dividend Yield= 1% Call Price= 25%

10. Volatility- Citibank Short/Long Exposure • Products • F&O Market • Perspective: Employee/Employer for ESOPs • Perspective: Employee/Employer for Market Linked Debenture