Sunday, June 23, 2024

Air India completes roll out of Esop

NEW DELHI : The Tata Group has completed the roll out of the employee share benefit scheme for Air India, by allocating 98 crore shares to the airline’s permanent employees. These shares represent about 3% of the airline’s equity.

“We received letters on 28 March regarding our share,” an employee associated with the airline said.

The company had launched the employee share benefit scheme in early this year in January 2023 for the permanent staff of Air India and Air India Express. At the time of its privatization, the airline had about 12,085 employees, of whom 8,084 were permanent employees. Air India is the third company from the Tata Group umbrella to offer stock option plan to the employees after Tata Motors and Tata Digital. Unlike the other two, Air India’s Esop scheme was decided as part of the divestment of the national carrier.

“Under the scheme, employees will have to pay 27 paisa plus taxes for a share and the book value has been set at 87 paisa per share value,” another person aware of the development said.

The scheme, which has offered around 3% of its equity share capital to the staff, has been implemented by SBI Caps Trustee Co. Ltd. The scheme had proposed that SBI Caps will first acquire the shares worth around 3% of equity share capital from Air India’s holding company Talace Private Ltd and would assign shares for each of the eligible employees.

The scheme will allow employees to exercise redemption of the stock option once a year, the person said, adding that employees need to make payments within a year to exercise the stock option benefit.

“In accordance with the share purchase agreement signed as part of the disinvestment process, Air India has initiated the Employee Share Benefit Scheme for eligible employees who were in service with the airline on the date of privatisation,” an Air India spokesperson said in response to Mint’s query. “We will be working with the relevant employees to help them understand the long-term benefits and avail of the same.”

In Indian aviation landscape, the largest airline IndiGo has had such a scheme for its senior executives since its early days. On 23 March, the company board approved grant of 67,150 Performance Stock Units to Chief Executive Officer Pieter Elbers under InterGlobe Aviation Ltd – Employees Stock Option Scheme 2015. Low-cost carrier SpiceJet had also extended its employee stock ownership plan to several mid-level employees in 2022. India’s youngest airline Akasa Air has also stated that it plans to implement an employee stock ownership plan for its employees.

Air India completed one year of privatization under the Tata Group on 27 January 2023. The company also made history this year by placing a massive order of 470 planes and option to buy another 370 aircraft. Recently, the airline implemented the second phase of voluntary retirement scheme, and is looking to bring its permanent employee count down by another 2,000. The airline has set aside 200 crore as part of the initiative, senior Air India executives had told Mint earlier.

In June 2022, around 1,500 employees availed the first VRS offer under the new management, following the takeover of the national carrier by the Tatas.

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