New Delhi: Having scrapped staff bonus payments last year due to adverse business conditions, ICICI Bank now wants its employees to earn their bonuses by helping the company achieve its profit targets.
"I want bonus to come back this year. I, of course, want my employee to earn bonus. But again, as I said, they have to earn bonus," the bank's CEO and Managing Director Chanda Kochhar told reporters.
The bank did not pay bonuses to employees, as also its directors, last year owing to tough market conditions, which had affected its financial performance badly. In 2008-09, its net profit fell by 10 percent to Rs 3,758 core, the first decline in full-year profit since its incorporation in 1994.
Exuding confidence that the bank would achieve its targets for the current fiscal and its profits would grow, Kochhar said she was hopeful of employees earning their bonuses for the current fiscal.
"We have to get to profit level that justifies bonus and I am clearly targeting and hoping and that's my ambition that we should get to profit level that justifies bonus," she said.
"So it (bonuses) should come back... That's clearly in my planning. But no body promises bonus till the performance actually comes," Kochhar noted.
Talking about the bank's decision on not to pay bonuses last year, Kochhar said: "I would say that last year the decision on not to give bonus was keeping in line with the economic environment. The environment was tough and I think it made sense to actually have a serious message for all of us to say that we are in tune with the economic environment."
Instead, the ICICI Bank chief said, the bank offered some stock options to employees as long-term retention measures. "As far as directors are concerned, we as directors ourselves proposed to the board that we do not want to take either bonus or stock options.
"So, while as the Managing Director I recommended that we should give stock options to other employees but as I said the current economic environment just warrants that we should all be just be in line with the economic environment," she added.
Asked whether the bank had set some threshold profit limits for the employees to earn their bonuses, Kochhar said: "There are clearly set thresholds. (But) I cannot disclose that because those are what we work out with our board and our team. So it's unfair to disclose that.
"But again those thresholds are never very generous and very easily achievable. They always build certain stretch in them. While I would want to give bonus this year, I will not give if those thresholds are not achieved.
"But I am hoping we will achieve those thresholds and there is no reason for us to believe that we will not achieve those thresholds," she added.
Bureau Report
First Published: Sunday, August 30, 2009, 14:49