Reliance announces ESOPs for 18,000 employees
Reliance announces jumbo employee stock option plan that will cover 18,000 employees, reports Suman Layak.business Updated: Apr 15, 2007 21:54 IST
Reliance Industries Ltd has announced a jumbo employee stock option plan that will cover 18,000 employees from the top honchos down to junior management. The company has informed the stock exchange late on Saturday evening about the decision to offer 2.87 crore shares as a part of this stock option plan.
The value of these shares at today’s price works out to a little more than Rs 4,000 crore.
According to industry estimates this would be the largest ever employee stock option plan for the manufacturing industry in India. While this is commonplace in many of the service sector companies, especially in the information technology services, in other sectors ESOPs are mostly restricted to the top management.
At the last annual general meeting of the company the shareholders had approved the employee stock option plan of Reliance Industries. The company’s board has the approval for issuing more than five crore shares through the scheme up to a maximum limit of five per cent of the company’s total equity capital.
The shares under the ESOP announced on April 14 will have a seven-year vesting period and the employees will get on an average five years for exercising their options to acquire these shares. The pricing will be under a pre-determined formula.
Details of how the 2.8 crore shares will be distributed among employees is not available. Recently, another manufacturing major Larsen and Toubro has allotted more than seven lakh shares through a stock option plan of which one per cent was allotted to the company’s directors.
Interestingly, Indian Petrochemicals Corporation Ltd, another Reliance group company already has employee shareholders who got their allotments as a part of the disinvestment process. Reliance too had acquired a controlling stake in the company through the process.
With the process of merger of IPCL and Reliance on the rails, the IPCL employee shareholders will also be allotted Reliance Industries shares in due course.