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July 16, 2001
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Money > Business Headlines > Report July 16, 2001 |
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Tata Steel puts Esop plan on backburnerRumi Dutta Tata Steel, the first and only Tata group company to officially ratify an employee stock option plan so far, has decided to put the proposal on the backburner. Confirming the development, Ramesh Nandrajog, Tata Steel's vice-president-finance, said in a faxed response, "Considering the present steel scenario, the (company's) board has decided to keep the subject of Esops in abeyance. As and when it feels the time is right, further action will be taken." During the last year, the Tata Steel board had approved the issue of over 7.3 million ordinary shares representing 2 per cent of its subscribed share capital to the staff and directors under the Esop plan to benefit its permanent employees. The move, senior HR managers said, once again underlines the unattractiveness of stock options as an employee reward programme as very few of India's largest companies have gone ahead with an Esop plan. While almost all major Tata companies had earlier taken shareholders' approval for Esops through enabling resolutions, Tata Steel was the only one to actually go ahead with such a plan. Several other companies, like Tata Consultancy Services, have begun to rely more on the concept of economic value added options as a means of rewarding employees. Even Tata Steel will focus more on performance-based incentive schemes for its senior managers. "Now that we are implementing the Performance Ethics Programme, it will be rolled out to the next level and ultimately to all the officers of the company," Nandrajog added. Recently, the company also initiated a new remuneration structure, directly related to steel production, which includes variable pay linked to the impact of the employees' performance on the company's value. Tata Steel, today, stands as a flat organisation after the completion of the de-layering exercise under its performance ethics programme. The company has managed to reduce its hierarchical layers from 14 to 5, categorised as impact levels 1 to 5. Over the last few years, the group flagship has managed to reduce its workforce from around 73,000 to below 48,000 now. During the current year, it plans to offer an early retirement scheme to another 4,000 employees. Powered by YOU MAY ALSO WANT TO READ:
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