New Delhi : State-owned companies may soon have to offer only Employee Stock Options (ESOPs) instead of cash as part of variable pay to staff if a proposal mooted by the Finance Ministry goes through.
The Department of Disinvestment under the ministry has suggested to the Department of Public Enterprises (DPE) that the Performance Related Pay (PRP) to PSU executives be in the form of ESOP so that employees can become part owners of the companies and have stake in their growth.
PRP is a variable component of the remuneration paid to the executives of CPSEs. “We have suggested to the DPE that PSUs may be asked to offer ESOPs to make up for the variable pay component of the staff,” a source told PTI.
Currently, the concept of giving ESOP as part of PRP is optional. A portion of the PRP can be paid in the form of ESOPs if employees opt for it. “We want more retail holding in PSUs. By giving ESOPs as variable pay package both the employee and the company benefit,” the source said. The disinvestment department has a mammoth target of Rs 69,500 crore of which Rs 41,000 crore is expected to come from stake sale in PSUs.
