SEDEMAC Clarifies ESOP Schemes to Proxy Advisor IiAS

Date: August 07, 2026

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Context: The company issued a postal ballot notice dated July 16, 2026, seeking shareholder approval for special resolutions, including:

1. Ratification of the SEDEMAC Employee Stock Option Plan 2014 (ESOP 2014)
2. Ratification of the SEDEMAC Mechatronics Employee Stock Option Scheme 2025 (ESOS 2025)

IiAS Recommendation: IiAS issued a report dated August 05, 2026, recommending voting 'AGAINST' both resolutions.

Company's Clarifications on Resolution No. 1 (ESOP 2014):

IiAS's concern was based on the possibility of options being granted with an exercise price at a deep discount (greater than 20%) to the prevailing market price.
The company defends the discretion of its Nomination and Remuneration Committee (NRC) to determine the exercise price, citing legal authorization under:
Rule 12(3) of the Companies (Share Capital and Debentures) Rules, 2014 (for unlisted companies)
Regulation 17 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (for listed companies)
The ESOP 2014 allows the exercise price to be set between 30% to 60% of the applicable 'Last Round Securities Price' or the 'Fair Market Value,' but not lower than the face value of the shares.
The company argues that a fixed exercise price would be counterintuitive for its R&D-intensive business, where retaining skilled employees is critical. The flexibility allows for tailoring grants to individual performance.
The company states that the exercise price does not impact shareholder dilution, as the maximum potential dilution was approved when the plan was adopted.
Historically, only 52,500 options (2.24% of the total available under ESOP 2014) were granted at the face value of the shares. These were issued during the COVID-19 pandemic to employees who had agreed to forgo a portion of their salary. All other grants until February 28, 2024, were made at a reasonable discount to or at the 'Fair Market Value.'

Company's Clarifications on Resolution No. 2 (ESOS 2025):

1. The possibility of a 15-year exercise period from the date of vesting.

2. The possibility of grants with a deep discount (>20%) to the market price.

3. Non-disclosure of a performance-linked vesting framework.

The company again cites legal authorization for the NRC to determine the exercise period (Rule 12(2)(g) of the Share Capital Rules and Part B of Schedule I of the SEBI SBEB & SE Regulations).
It defends the need for flexibility in setting both the exercise price and the vesting terms, reiterating the importance of customization for employee retention.
Regarding the performance metrics, the company states that the ESOS 2025 is performance-driven at both grant and vesting stages. The vesting criteria may be based on the achievement of conditions related to the employee's, team's, office's, company's, or group company's performance (e.g., enrolments, ranks, revenue, profitability). The company does not propose a rigid, uniform framework.
The company assures that the NRC will ensure parameters are objective, measurable, and aligned with performance.

Conclusion & Action:

The company asserts that both resolutions are compliant with applicable law and that adequate disclosures have been made.
The matters were approved by the NRC and the Board after thorough deliberation.
The company requests IiAS to share this response with its subscribers and to amend its recommendations based on the clarifications provided.
The company will disclose these clarifications to the stock exchanges (BSE and NSE) for the benefit of all shareholders.