Most companies offer employees stock-based incentives

A majority of the companies in the country have stock-based incentive plans in place for their employees as part of long-term strategy to retain talent, says a survey.

When it comes to stock-based incentive programmes, most of the organisations prefer 'Employee Stock Option Plans' (ESOPs), as per the findings of a survey by consultancy EY.

The 'Stock Based Incentive Survey' showed that as much as 71% companies have adopted stock-based incentive plans as a tool to retain and attract talent as well as create wealth for the employees.

Of these, 57% employers used ESOPs while 17% used a mix of all stock-based plans for employees.

The survey found that 16% of the employers offered stock-based incentives to their employees with objective of retaining them, 9% with an aim to attract talent, while 7% did so to create wealth for the employees.

Among the Indian companies surveyed, as many as 88% preferred ESOPs as the scheme is easier to understand and and helped in retention. As much as 49% of the multinational firms favoured the plan.

However, a majority of the firms were found to be offering the stock-based incentives plans to only a selective number of employees.

Industry-wise, the stock-based incentive plans were more likely to be rolled out by technology, telecom and media companies (37%) followed by manufacturing and consumer goods (20%), healthcare and life sciences (14 per cnet) and financial services (11%).

"...A common theme of hiring and retention of critical talent has ensured that successful and growing organisations across all sectors consider a compensation strategy married to stock-based incentive plans," EY Partner and National Leader - Human Capital Services Sonu Iyer said.

Meanwhile, the findings also suggested that MNCs had allotted higher capital towards stock-based incentive plans compared to the Indian companies.

While most of the Indian companies have committed up to 3% of their paid up share capital toward stock-based incentive plans, a majority of the MNCs were found to have set aside 5-10% of the share capital for such schemes.

The survey was conducted online and through personal interviews between December 2013 and January 2014.

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