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Employee benefits which do not involve purchasing securities of the company (directly or indirectly) would not be governed by SEBI’s share-based employee benefit (SBEB) regulations.
SEBI said this in two separate informal guidance rulings in the matter of issuing stock appreciation rights (SAR) to Saregama India and Mindtree to their key managerial personnel. SAR is a method where employees benefit from an increase in stock prices.
Saregama had sought SEBI’s guidance on whether the issue of granting two lakh shares or phantom options — where the MD would be entitled to receive the benefit of increase in the company’s share price from the date of grant till the date of exercise — would come under SBEB regulations.
Mindtree had also sought SEBI’s guidance on the issue of notional stock appreciation rights (SAR) units to its six promoters entitling them to receive cash payment for appreciation in Mindtree’s share price over the grant price of the awarded SAR units.
As the gesture was based on the company achieving the specified revenue targets would it come under SBEB regulations, Mindtree queried.
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