Banks reward employees with appealing ESOP schemes

Techcombank’s head office in Lý Thương Kiệt Street, Hà Nội. — VNS Photo Ly Ly cao

HÀ NỘI — Việt Nam International Commercial Joint Stock Bank (VIB), Nam Á Bank and Techcombank have all announced plans to issue shares through employee stock option programmes (ESOPs).

The goal is to increase their respective charter capital and potentially improve employee productivity and engagement.

Nam Á Bank intends to issue 50 million ESOP shares at VNĐ10,000 per share (US$0.4), raising its charter capital by VNĐ500 billion ($19.78 million). This issuance will account for 4.726 per cent of outstanding shares and is expected to occur in 2024, pending regulatory approvals.

The ESOP shares will be subject to a one-year transfer restriction, after which 50 per cent of the remaining shares will be released.

Separately, VIB announced it will issue over 11 million bonus shares to employees, worth more than VNĐ230 billion, based on the bank’s current share price range.

VIB awarded bonus shares to 1,918 employees, accounting for around 16 per cent of the bank’s 12,000 workforce. The number of shares granted ranged from 1,000 to 600,000, depending on the employee’s position and performance.

The largest recipient was Head of Treasury Lê Quang Trung, who receives nearly 620,000 shares worth approximately VNĐ12.9 billion based on the July 26 closing price of VNĐ21,000.

Eligible recipients included officers and employees at grade eight or higher, excluding board members and board of supervisors, except for the board member cum general director.

Meanwhile, Techcombank is also planning an ESOP issuance in 2024, following the State Bank of Việt Nam’s approval for the bank to increase its charter capital to VNĐ70.45 trillion by issuing new shares from equity.

While the details of Techcombank’s upcoming ESOP have not been disclosed, the scale of the capital increase from this plan is not expected to be substantial.

Previously, Techcombank distributed 5.27 million ESOP shares worth VNĐ52 billion in 2023, raising its charter capital to over VNĐ35.2 trillion. The bank also offered 6.3 million ESOP shares to employees in 2022, continuing a programme it has maintained since 2018.

ESOP has become a popular employee reward mechanism, allowing eligible staff to purchase company shares at discounted prices. This incentivises employees to contribute to the firm’s growth, as they become shareholders themselves.

Industry experts view ESOP as a cost-effective way for banks to motivate employees. Under Việt Nam’s accounting standards, the difference between ESOP share prices and market rates is not counted as salary or bonus expenses. As a result, ESOP awards do not significantly impact banks’ reported profits, which can appear more attractive than cash bonuses.

However, these ESOP issuances are sometimes not favour by shareholders due to concerns about share dilution. — VNS