ICICI top officials forgo annual bonus after dismal Q4 performance
The move was proposed by the executive management to the bank’s board after the private lender witnessed its worst quarterly performance in a decade, with its net profit falling by 76% to Rs 702 crore due to a surge in bad loans.business Updated: May 01, 2016 13:32 IST
After a dismal fourth-quarter performance and increased stress owing to defaults, the ICICI Bank’s top management decided to forgo its performance bonus for the financial year 2016.
It would, however, be paid to employees in the grades of deputy general manager and below, said managing director Chanda Kochhar.
This was proposed by the executive management to the bank’s board after the private lender witnessed its worst quarterly performance in a decade, with its net profit falling by 76% to Rs 702 crore due to a surge in bad loans. The stressed loan situation is likely to continue for some more quarters as “there are significant uncertainties around future trends, and it is expected that NPA (non-performing asset) additions will continue to be at elevated levels during the financial year 2017,” the bank had said.
The bank’s annual report said that Kochhar’s bonus for FY-15 stood at Rs 1.66 crore, while the three executive directors – NS Kannan, K Ramkumar and Rajiv Sabharwal – earned a total bonus of Rs 3.19 crore, bringing the cumulative top management bonus to Rs 4.85 crore.
The senior management includes about 300-400 staff members such as the managing director, executive directors and officials who are three levels below – senior general managers, general managers and joint general managers.
The remuneration provided to the senior management comprises basic salary, performance bonus, allowances and prerequisites, and stock options.
This is not the first time the top management will be letting go of its performance bonus. In 2008-09, the bank refrained from giving performance bonuses and stock options to its top management, and reduced by half the employee stock options of its second-level management.
This was done after the Lehman Brothers’ crisis, when the bank’s net profit in the March quarter of 2009 dropped by 35% to Rs 744 crore.
During the January to March period this year, the employee expenses for ICICI Bank increased by 5.3% on a year-on-year basis. The provisions for retirement benefits fell in fiscal 2016, compared to fiscal 2015, due to movement in yields. Excluding the provisions for retirement benefits, employee expenses increased by about 8% on a year-on-year basis.