India's largest exploration firm Oil and Natural Gas Corporation is considering giving 2-3 per cent of its equity shares to workers as employee stock options.
"We are considering giving our 40,000 employees stock options (40 million shares, in all)," said an ONGC director.
ONGC, which has appointed global consultant Mercer as its advisor, is the only state-run firm currently working on an employee stock option plan (ESOP).
Mercer will help ONGC in designing and implementing the ESOP.
Initially, six consultants including Hewitt Associates, KPMG, PricewaterhouseCoopers, Mercer, Ernst & Young and Watson Wyatt made presentations. Of these, three - KPMG, Mercer and Ernst & Young - were shortlisted for submitting formal proposals.
The director said the consultant would be required to identify various employee stock option plans suitable for ONGC taking into account best practices prevalent in the industry.
"We feel money alone cannot motivate employees to excel in their profession. Giving employees ESOP will involve them more in the company's growth," he said.
ONGC is working on parameters of assessing performance of employees. Equity shares would be given in proportion to their professional performance.
The ESOP may have a lock-in period, i.e., employees will not be able to sell their quota of shares in the market before expiry of a certain period.
"We expect ONGC scrip to rise further and shares in hands of employees will only motivate them to perform even better," he added.
The ONGC director said the ESOP will have to be cleared by government's Public Investment Board and possibly by the Cabinet Committee on Economic Affairs before it is implemented.
The consultant would in Stage-1 detail a feasibility and diagnostic study detailing the various employee stock option plans suitable for ONGC, identifying key components like eligibility criteria, funding mechanism, measures of performance and conceptualising the scheme which meets guidelines laid down by government bodies like Department of Public Enterprises, Securities and Exchange Board of India and Department of Company Affairs.
In subsequent stages, it will assist ONGC in obtaining management, government and other approvals and provide implementation support.
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