Tata Group-owned Air India is likely to offer employee stock options (ESOPS) to its staff in an attempt to incentivise them and improve the overall performance by giving them a sense of ownership in the company.
The board will soon come up with a detailed ESOP policy that will state the number of shares and prices at which it will be offered to the employees, according to a report by the Business Standard.
“As part of the share purchase agreement, the Tata Group has agreed to give 3 per cent of Air India's equity shares to the permanent employees of the company. The board will soon pass a resolution to this effect. It will give employees a sense of ownership in the company, whereby the performance of the company will also impact their own compensation,” the publication quoted a source as saying.
The report further said that Air India will be the second company in the Tata Group to have such a policy, the first being Tata Motors. Besides the ESOP policy, the company will also introduce a key performance indicator for the employees, the report said.
The move is apparently directed towards retaining talent and improving the productivity of Air India, which has been a loss-making company for almost a decade. IndiGo and SpiceJet already have ESOP policies for its staff.
After a competitive bidding process, the government had on October 8 last year sold Air India to Talace Private Limited - a subsidiary of the Tata Group's holding company - for Rs 18,000 crore.
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