By Retaining ESOPs Whilst at Sebi, Buch Put Herself in a Position That is “Improper and Wrong”

By retaining ESOPs whilst at SEBI, Buch put herself in a position that is "improper and wrong": Managing Editor, Moneylife, Sucheta Dalal, to Karan Thapar for The Wire.

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In an interview where she raises serious and damaging concerns about the fact Madhabi Puri Buch, both as a whole time member and Chairperson of SEBI, retained ICICI Bank ESOPs, the Managing Editor of Moneylife, has said that as a result the Chairperson of SEBI put herself in a position that is “improper and wrong”. Sucheta Dalal said that on the basis of “the preponderance of probability” – criteria that SEBI itself uses – it’s likely that at SEBI Madhabi Buch would have both had access to unpublished price sensitive information and also would have taken decisions that affect ICICI, directly or indirectly, both of which in turn would have impacted the shares she had. Sucheta Dalal says this is “a big concern”.



In a 30-minute interview to Karan Thapar for The Wire, Sucheta Dalal also asked how is it that SEBI, “an institution with over three decades of experience”, does not have “robust mechanisms” amounting to detailed and stringent rules that apply to the investments, salary and ESOPs of people who work in and, particularly, head a regulatory organization. She said the finger of responsibility and blame for this goes all the way up to the Appointments Committee which chooses the Chairperson of SEBI. In this instance, the Appointments Committee comprises the Prime Minister and the Home Minister.



Talking about the “toxic work culture” at SEBI, which has provoked protests by hundreds of its employees, Sucheta Dalal asked how come the Board of Directors of SEBI is silent and has not felt the need to speak about and address this issue. It’s silence is clearly a sign that its failing to do its job.



In the interview, Sucheta Dalal also spoke about questions raised by Pawan Khera of Congress regarding the retiral benefits – their amount and frequency – drawn by Madhabi Buch from ICICI Bank. She also spoke about the story published in Mint alleging that between 2011 and 2013 Madhabi Buch worked for Greater Pacific Capital whilst also working for ICICI Bank.



I will stop there. You must see the interview to find out further details about Sucheta Dalal’s views. She is India’s leading expert on money markets and you will learn an awful lot from the details of her answers as well as the richness of her analysis.



However, to help you, I will give you a list of the main questions asked. Here they are:



1) I want to focus this interview on the SEBI Chairperson Madhabi Puri Buch and her former employer ICICI Bank and then raise the question what lessons should SEBI learn from this. First, the Congress Party has asked how can Madhabi Buch’s retirement benefits be significantly more than her last drawn salary as an employee of ICICI Bank. Is that a legitimate question? And does it require an answer from ICICI?



- “The average salary drawn … from 2007 up until 2013-14 … is 1.3 crore per annum. However, the so-called retiral benefit given by ICICI … from 2016-17 to 2020-21, averages … 2.77 crore per annum. How can a person’s retiral benefit be more than her salary as an employee?”



Pawan Khera.



2) Congress has also asked why the “retiral benefit” was not uniform in terms of its frequency and amount? In 2014-15 Madhabi Buch received over 5 crores. The next year she got nothing. But between 2016-17 and 2021 the retiral benefits resumed. Again is this a legitimate question? Does it require an answer from ICICI?



3) Perhaps the key question is to do with how long Madhabi Buch held on to her ESOPs. ICICI Bank’s ESOP policy, available on the US Securities Exchange Commission website, says an employee can exercise ESOPs within a maximum of three months after retirement but the Remunerations and Nominations Committee can extend this period up to 10 years from the date of vesting. Since Madhabi Buch held on to her ESOPs for around 8 years she clearly was given special permission to do so. Do we have a right to know on what grounds she was given this special permission?



4) Even more significant is the question what are the implications of the fact she held on to her ESOPs whilst she was a whole time member of SEBI and also Chairperson of SEBI? During this time would she have had access to unpublished price sensitive information or would she have taken decisions that affect ICICI, directly or indirectly, that would have impacted the shares she held? And is that a matter of concern?












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