HDFC Bank's Aditya Puri to wind up with shares worth Rs 800 cr

KEY HIGHLIGHTS

• Value of shares owned by Puri is more than market cap of NBFCs such as Magma Fincorp, Centrum Capital, Capital India Finance
• Puri is the highest paid CEO in banking industry; his total remuneration was Rs 18.9 crore in 2019-20
• Puri will make an exit in October; Sashidhar Jagdishan and Kaizad Barucha are the top two internal candidates to succeed him
• Puri had left his job in Citibank Malaysia to start a greenfield bank promoted by mortgage lender HDFC Ltd in early 90s

HDFC Bank MD & CEO Aditya Puri, who is also the highest paid banker, will be retiring in October this year with shares worth Rs 800 crore in the private bank. These are the shares granted to Puri by way of employee stock options at different price points at over the years. The wealth created by Puri is more than than the market capitalisation of some of the established NBFCs like Magma Fincorp, Centrum Capital, Capital India Finance, PNB Gilts, Muthoot Capital Services, 5paisa Capital.

As per the disclosures, there are 77.96 lakh equity shares outstanding in the name of Puri in the bank as on March 31, 2020. The value at the current market price of Rs 1,028 per share comes out to be Rs 800 crore. As the bank grows further, Puri will certainly multiply his wealth in the bank.

There's a lot to takeaway from 70-year-old Puri's career for any corporate leader - slog it out in the early part of your career, build a sustainable long term business and emerge as a high paid CEO. Along the way, you also grow your own wealth in the company by way of reward and bonuses that come through employees stock option scheme.

Puri left his cushy job in Citibank Malaysia to head back home to start a greenfield bank promoted by mortgage lender HDFC Ltd in early 90s. In the next two and a half decades, Puri scaled up the bank organically and turned it into a profit making machine with lowest NPAs in the industry.

The performance numbers are mind boggling. A balance sheet size of Rs 15.30 lakh crore, deposits of Rs 11.47 lakh crore, profits of Rs 26,257 crore and gross NPAs of negligible 1.26 per cent. The bank has also made its parent HDFC Ltd proud. The market valuation of the bank at Rs 5.87 lakh crore is far higher than the market cap of HDFC Ltd at Rs 3.09 lakh crore.

While building the bank and creating wealth for everyone, Puri also emerged as the highest paid banking CEO. His total remuneration was Rs 18.9 crore in 2019-20. Under Puri's leadership, the bank has also transformed into a digital bank. The digital journey for all banks is a work in progress, and a lot is going to change in the next 3-5 years.

There are also challenges ahead for HDFC Bank because the new CEO has to steer the bank through the realities of a post-Covid world. Growth is shrinking and slowing down, incomes are falling and competition is increasing. The new leader will face the challenge to retain top talent in the bank  post Puri's exit. Puri had nurtured the best talent in the bank all these years.

Currently, Sashidhar Jagdishan and Kaizad Barucha are amongst the top two internal candidates to succeed Puri. Barucha, who has the highest board experience, is the senior most. Jagdishan is a dark horse to replace Puri. Sunil Garg from Citibank is also in the fray while Bhavesh Zaveri , another internal candidate has also been screened by the six-member succession committee.

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