INDIAN FIRMS NEED TO REVIEW STOCK OPTION TO BEAT DOWNTURN : ESOPDIRECT
FINANCIAL EXPRESS DATED 15.5.2001

Geeta Nair in Pune
 

Indian companies that have granted employee stock options (ESOPs) have failed to respond to the downturn in the stock prices. Though a large number of options are now under water it is surprising that Indian companies have not responded. In the US, more than 30 per cent of the hi-tech companies have already re-priced their options, while barely 8 per cent of the Indian companies have managed to do so.

These are the findings of the nationwide survey conducted by ESOP Direct on the design practices followed by the companies while structuring their ESOPs. The 'ESOP Design Practices 2001" survey in the first such survey conducted in India to understand the trends in Indian companies. ESOP Direct is an end-to-end ESOP solutions provider in India and has designed and reviewed the stock option plans implemented by IT and non-IT companies.

ESOP Direct contacted around 150 companies for conducting this survey. Responses from 40 companies were used to compile the survey. Of these, 30 were listed companies and 10 unlisted, while 28 were in the information technology and software sector and the remaining from other sectors.

Harshu Ghate, managing director, ESOP Direct, says that despite the wide coverage and the financial and legal implications, there is no authentic source of Information about trends and practices followed by Indian companies in designing their ESOPs.

"While enormous data is available on the global practices, data relevant to the Indian context is not available, "adds Ghate.

The survey reveals that around 43 per cent of the IT companies offered ESOPs to more than 90 per cent of their employees.


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