PSUs likely to get Esop tool to retain top talent

[Admin]

NEW DELHI: Blue chip public sector companies may soon be allowed to offer employee stock options (Esops) to top performers in a bid to retain talent. The government has asked public sector companies to work out an Esop scheme in this regard.

A proposal to empower PSU boards to offer Esops on merit is being considered by the department of public enterprises (DPE) as part of its exercise to make PSU pay reflect market realities. The matter has been discussed by the second pay revision committee for the central public sector enterprises (CPSEs), which is expected to submit its recommendations to the government on May 31.

“The panel is studying the possibility of recommending productivity-linked incentives and performance-related payments, which may include Esops as one of the tools,” a government official said.

At present, PSUs do not have the power to reward extraordinary talent in the organisation by deviating from the standard wages format. Companies can only offer stock options to employees on a non-discriminatory basis during the public offer, where a part of the issue is reserved for employees. Esops, as a retention tool, gained ground in new economy sectors and has now become an effective tool to retain talent across sectors.

[Admin]

“We want to provide more flexibility to PSUs to compete with multinationals and retain talent by offering identified executives something extra in the form of an Esop. The pay revision committee of DPE is already working on the new scheme and suggestions have been invited from PSUs and the nodal ministries in this regard,” the official said.

The proposal, if finalised, would require the approval of the Cabinet Committee on Economic Affairs (CCEA) to become operational.

It is expected that the Esop scheme would be useful especially to prevent top PSU executives from taking up any assignment with a private sector company. “Retaining top-level executives has become the biggest challenge for any organisation today.

The turnover, especially in PSUs, is highest in the junior and the senior-most executive positions. While we have started recruiting more people at the junior level, retaining talent at the topmost level remains a challenge and it is here that a flexible Esop scheme would come in handy,” director (human resources) of NTPC, RC Shrivastav, said.

Top executives of oil, power and telecom PSUs have been particularly vulnerable to poaching in the recent past. Reliance Power CEO JP Chalasani and Reliance Industries president (international operations) Atul Chandra are among the top business executives who have come from navratna PSUs.

Also, mid-level executives in the range of general managers and above are too much vulnerable. In fact, ONGC had recently made a lucrative offer to all its mid-level executives who had left the company for greener pastures.