This is a listed frontrunner Indian pharma company with more than 60 years’ history and market in more than 150 countries outside India. Primarily a family controlled business, the company decided to hire a top notch pharma veteran from a multinational company at the CEO position. He was envisaged to be leading the company through organic growth and developing overseas presence through partnerships as well as targeted acquisitions.
The challenge was to create an environment for long term wealth creation opportunity for the CEO. Nevertheless the company also aspired to balance wealth creation and equity dilution. The company also needed to make a commitment to bring market parity to overall compensation for the CEO.
A scheme of discounted ESOPs was designed to provide attractive wealth creation opportunity. Units granted under this program were given at discounts with a staggered vesting schedule within a 5 year vesting period. The scheme was implemented ensuring compliances under applicable laws and optimized for accounting costs. ESOP Direct also offered support in administration of the Plan through the software platform My ESOPs.
With the discounted scheme we were not only able to reduce funds outflow from employees at the time of exercise, we also lowered dilution to shareholders which in turn stood in favor of the company thus bringing about a win-win situation.