ESOPs regain popularity among India Inc

MUMBAI: Indian companies continue to adopt conventional equity-linked plans for their Employee Stock Option Plans (ESOPs) according to a recent survey carried out by KPMG (India). Of the 460 companies surveyed, 215 companies (nearly 47%) had implemented or were planning to implement ESOPs.
ESOPs as an incentive tool, was popular in the information, communication and entertainment sector, followed by financial services, manufacturing and consumer goods sectors.Further, the ESOP schemes were broad based, nearly 60% of the respondents indicated that their plan applies uniformly to all employees. KPMG-India says that, “The recent trends of multi-fold deals of management buy-outs and overall buoyancy in the stock market, coupled with certain regulatory changes (including the new ESOP guidelines issued by The Securities and Exchange Board of India) have been among the drivers for many companies to re-consider ESOPs.
However, the survey noted that very few unlisted companies are contemplating an initial public offer, which indicates that companies are envisaging alternative exit mechanisms for encashing the shares granted to employees under ESOPs.