June 2020

1

New Stock Option Proposal

26/11/2020

Current Stock Option Plan

Incentive Scheme for Top 300+ Critical Roles

Current ESOP Scheme

3.8 M ESOPs issued with Exercise Price of ₹ 85 and vesting over 3 yrs. starting July 2020

VestingY1 : 30%, Y2 : 30%, Y3 : 40%

The Options were given out of the available shares with the Employee Welfare Trust and hence there was no dilution.

36/11/2020

Current Scenario

The Covid-19 outbreak has resultedin unprecedented times for thewhole world resulting in a lot ofuncertainty

The exercise Price of ₹ 85 pershare is out of the money andthus not attractive for the criticalemployees

We are cautious about FY21 owing toambiguity due to the currentdisruption and possibility of arelapse of the pandemic globally

To counter the current scenarioemployees will end up taking asalary cut to the tune of ~25%(variable pay basis annualcompany performance)

We need to ensure theseemployees stay motivated and wemaintain the attrition level lower.Once the current phase ends, weneed to be ready for growth andthese employees will enable thesame

46/11/2020

Proposed ESOP SchemeModified Incentive Scheme for Top 300+ Critical Roles

Proposed ESOP Scheme

Proposal to cancel the current ESOPScheme and issue ESOPs under a newScheme at a price not less than FaceValue, decided by the NRC, with optionsvesting over 3 years, starting June 2021

VestingY1 : 30%, Y2 : 30%, Y3 : 40%

The Options are proposed to be given from the available shares with Employee Welfare Trust andhence there will be no dilution.

• Employees proposed to becovered are around 4.25% ofthe total strength of KPIT

• The coverage is based onroles and not grades and willcover grades up to 8 levelsbelow the CEO

56/11/2020

Existing & New ESOP Scheme – Employee angle

Existing ESOP SchemeExercise Price ₹ 85

Proposed ESOP SchemeExercise Price* ₹ 10

3.8 M ESOPs

* To be decided by NRC, assumed at Face Value

The proposal to issue ESOPs at Face Value is to ensure theESOPs usually stay in the money and the employees always seethe potential upside for them.

The main objective of the new proposed ESOP scheme is to actas a strong incentive for the next 3 years by potentially enablingthe eligible employees to get compensated for the variable payand incentive they are forgoing now.

66/11/2020

New ESOP Scheme – Accounting Impact

Considering the current market price, the proposedESOP Scheme valuation delta will not have a majorimpact on the profit and loss account.

Total Cash conserved on the balance sheet as acumulative impact of variable pay and incentivereduction will be equal to approx. ₹ 500 million

Thus as a net impact it will be EPS accretive.

76/11/2020

Vesting of Stock Options

The proposed stock options shall vest for senior level and otheremployees on the basis of company and business unit performancerespectively.

The Nomination and Remuneration Committee (NRC) will prescribe theperformance criteria as stated above for different groups of employeesfrom time to time broadly based on the following areas:

1. Cash conservation

2. Wallet share in target customers

3. Employee Retention and

4. Profitability

86/11/2020

Thus to summarize….

The New ESOP Scheme is in lieu of the existing ESOP Scheme and thereis NO DILUTION and thus no impact on EPS

The New ESOP Scheme will shift the first vesting by one year and thegrantees will thus not potentially be able to liquidate for one year. Plusit will provide an additional year of incentive for the employees.

A lesser variable pay and cash incentive will help conserve cash on thebalance sheet

With reduced variable pay and incentives, the New ESOP Scheme willserve as a strong motivation and help reduce attrition

Thank You

96/11/2020