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The unmaking of Infosys millionaires: Hindustan Times
New Delhi, Apr 16: This isn`t the best time for an Infosys employee to sit in front of the stock ticker with a calculator. If a group of say, four of the company`s 60-odd dollar millionaires did that today, two would have to leave the club.
New Delhi, Apr 16: This isn`t the best time for an Infosys employee to sit in front of the stock ticker with a calculator. If a group of say, four of the company’s 60-odd dollar millionaires did that today, two would have to leave the club.
For every two millionaires that the `Murthy` factor made, the market has just unmade one. As on April 11, Infosys was left with 32 dollar millionaires (down from 62 in March 2002) and 652 rupee millionaires (previously 1,210). For those who went in for the ESOPs offered by the company it’s a notional disaster that they’re still trying to come to terms with.
“Five years ago I took the offer from Infosys ignoring another one from an unlisted software major that offered cash bonuses on projects completed before time. The sole criterion for deciding was the ESOPs offered by Infy riding on the stock market boom. Today, it looks like a bad decision,” says an Infoscion. It’s not that ESOPs come free. Those who are offered shares have to pay 90 per cent of whatever the current value is. There’s also a minimum three-year lock-in period.
That’s why it must hurt to see the stock trading at Rs 2,617.50 today. Though its face value is Rs 5, very few would have bought the stock at anywhere near that level.
Many, in fact would have considered themselves fortunate if they bought even in the mid-3,000s. Well, all that’s changed now: had anybody bought the stock at those levels, they’d be wiped out and worse.
It is those that didn’t exercise their stock options who are sleeping a little better these days. “I was eligible for an ESOP under the 1999 stock plan but somehow decided to refrain from picking up stock as I have always been a little wary of the way the bourses work,” says an employee.
In hindsight, others made the mistake of trusting the market. For a time, it worked. At its peak, the stock was being traded at over Rs 17,000. “We almost started believing we were rich,” said an employee. But the past tense is the operative part here.
So why did it go wrong? Analysts say that it was Infy’s almost total dependence on labour arbitrage and the fact that it didn’t really have a product that’s led to the present situation. Which will change only if the business model changes — unless the stock market god is extra kind.
For every two millionaires that the `Murthy` factor made, the market has just unmade one. As on April 11, Infosys was left with 32 dollar millionaires (down from 62 in March 2002) and 652 rupee millionaires (previously 1,210). For those who went in for the ESOPs offered by the company it’s a notional disaster that they’re still trying to come to terms with.
“Five years ago I took the offer from Infosys ignoring another one from an unlisted software major that offered cash bonuses on projects completed before time. The sole criterion for deciding was the ESOPs offered by Infy riding on the stock market boom. Today, it looks like a bad decision,” says an Infoscion. It’s not that ESOPs come free. Those who are offered shares have to pay 90 per cent of whatever the current value is. There’s also a minimum three-year lock-in period.
That’s why it must hurt to see the stock trading at Rs 2,617.50 today. Though its face value is Rs 5, very few would have bought the stock at anywhere near that level.
Many, in fact would have considered themselves fortunate if they bought even in the mid-3,000s. Well, all that’s changed now: had anybody bought the stock at those levels, they’d be wiped out and worse.
It is those that didn’t exercise their stock options who are sleeping a little better these days. “I was eligible for an ESOP under the 1999 stock plan but somehow decided to refrain from picking up stock as I have always been a little wary of the way the bourses work,” says an employee.
In hindsight, others made the mistake of trusting the market. For a time, it worked. At its peak, the stock was being traded at over Rs 17,000. “We almost started believing we were rich,” said an employee. But the past tense is the operative part here.
So why did it go wrong? Analysts say that it was Infy’s almost total dependence on labour arbitrage and the fact that it didn’t really have a product that’s led to the present situation. Which will change only if the business model changes — unless the stock market god is extra kind.