Air India rolls out a staff stock option plan

Air India has rolled out an employee share benefit scheme, offering around 3% of its equity share capital to the staff in a bid to incentivise them and improve their performance.

The erstwhile national carrier, which was acquired by Tata Group last year, will be the second company in the salt-to-steel conglomerate to roll out a stock option plan for employees after Tata Motors implemented a scheme in 2018.

However, Air India employees will not personally own any of its shares at any point of time as the shares under the scheme will be held by a trust.


Air India has appointed SBI Caps Trustee Company Ltd to implement the scheme.

Under the process, the trust first will acquire the shares from Talace Pvt Ltd, which is the holding company of Air India, and then it will assign shares for each of the eligible employees.

The fair market value (FMV) will be calculated every year by July 15 and employees will be able to encash their shares.

The objective of the scheme is to provide employee share benefit scheme at a pre-determined price, which is at a discount to the current fair market value of the company, Air India said in a note to employees.

According to the share purchase agreement of Air India, Tatas were mandated to adopt an employee stock option scheme (Esop) within three months of the closing date of the sale. The sale of Air India was closed on January 27, 2022, with the formal handing over of the airline.

“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. We will be working with the relevant employees to help them understand the long-term benefits and avail of the same,” a company spokesperson said.

Air India’s competitors, IndiGo and SpiceJet, also have Esop policies in place. IndiGo allotted shares to its top management in its early days, and most of them became millionaires when the airline listed on the stock exchanges in 2015 at a price of Rs 765 a share.

Akasa, the new Indian airline backed by billionaire investor Rakesh Jhunjhunwala, is also offering stock options to attract staff.

The Tata Group is overhauling Air India’s human resources process. Air India has opened up a direct communication channel for its 7,000-odd employees, so that employees can reach out to the management to sort out their issues. The company is planning to have periodic town halls where employees will have the opportunity to ask questions and engage directly with CXO-level executives.

Air India has created indirect recognition programmes to reward good performance. As part of the rewards program several employees got cash reward during Diwali and New Year, company insiders said.

“We are focused on implementing the Tata Code of Conduct by removing biases and prejudices within the organisation,” a senior executive said on condition of anonymity. “We are encouraging interactive feedback and asking employees to look at facts and data and not be influenced by rumours and speculation.”