More than 62% of the companies have Plans that are more than 3 years old. These companies have thus been exposed to almost all the issues in ESOP administration

More than 55% of the companies have covered more than 50% of the employees under ESOP. This is noticeable since in India none of the Plans are broad based like ESPP in the US or SAYE in UK.

It is also interesting that the % coverage is similar across the Industrial segments whether it is IT or non IT. In fact in the non-IT segment more than 74% of the companies have covered more than 50% of the employees. The trend is similar in the unlisted segment as well.

Another indicator of the impressive profile of the participating companies is that more than 83% of the companies have overseas operations and more than 60% of those have covered overseas employees. In the IT segment all the companies have overseas presence and 76% have covered overseas employees.

HR function is primarily responsible for ESOP administration in more than a third of the companies. This trend is stronger in the IT segment (47%). Company Secretaries are the next overalls with about 33%. In the unlisted segment it's mostly the Finance function (56%) that takes on this responsibility.

More than 83% of the companies do not have a dedicated administrator to handle this role. This is further confirmed by the finding that the same number of companies spend less than 5 person days per month on ESOP administration. Considering the use (or absence of it) of software, the extent of Management Reporting generated, time spent on training employees, this time allocation only indicates that companies have not been concentrating enough on this function.

In the IT segment more than 18% companies spend more than 10 man days per month on this function. The figure in case of listed companies is 20%.

Around half of the companies use in-house software (mostly spreadsheets) to keep ESOP data.

Around 50% of the non-IT companies use third party software for Administration.

More than two thirds of the companies use Intranets as one of the modes of communicating with employees. Almost half the companies use some mode other than paper / mailer to communicate with the employees.

More than half the companies use multiple modes of communication.

Use of Internet is more popular for addressing queries (35%) than for communicating grants (15%) or exercise (19%).

Paper is mostly used mode for communicating Grant (30%)

Half the companies give access to the employees to their respective ESOP record.

Most of the companies are discretionary when it comes to frequency of reporting to employees. Around 25% of the companies send ESOP reports to employees only once in a year and almost half the companied give reports on a need to do/ as required bases.

More than half of the companies (52%) do not distribute any material other than the statutorily required documents such as scheme document, grant letters, etc. More than 69% of the companies do not provide for any training / seminars on their ESOPs for the employees. Both these indicators show that companies are not giving due attention to educate the employees on the company's ESOPs as well as on the concept of stock options in general.

Amongst the industry segments, more than two thirds of the IT companies do not give any extra material on ESOPs to employees, whereas the trend is exactly reverse in case of non IT companies where 73% of the companies distribute some other material apart from the legal documents.

While more than 90% of the companies feel that their senior management understands the value of ESOPs, more than two thirds feel that at Middle and Junior levels the understanding is general or limited. Considering the coverage of the employees, it is at this level that communication to create awareness needs to be focused on.

Management reporting

Around a third of the companies do not generate any Management reports on ESOPs

Of the others, half generate the reports on a monthly or quarterly frequency. The others do so once in a year or need based.

More than a third of the companies do not generate the report on Accounting impact (Compensation Expense allocation), while around 42% use some computerized models to quantify this impact.

Interestingly 11% of the companies allow electronic signature as a confirmation on the grant agreement. This is a welcome trend.

More than 46% of the companies have a Trust to administer ESOPs. This trend is more prevalent in the IT segment (53%) than the non IT (36%).

More than 33% of the companies allow exercise of shares once in a year. This would imply that they have very short exercise window that is open only once on vesting. The employees, who would want to exercise at their will, barring the black out periods, could view this as a constraint.

Only 11% of the companies allow fortnightly exercise. This could be due to the hassles of listing the shares. In a related finding for more than 83% of the companies it takes more than 4 weeks to list there shares. Listing of shares is an important area that the regulators need to give some concessions for ESOP shares.

More than half of the companies have considered Outsourcing their ESOP administration process. Whereas only 14% have actually outsourced this function. This leads to related issue of what are they looking at in the third party administrator. Top three considerations are Domain knowledge of the vendors, confidentiality of data and effectiveness of the service provider.