India Inc records 35% increase in equity grants this year

BANGALORE: The need to attract and retain talent has pushed India Inc to give out 35% more equity grants in 2012 compared with last year, according to a Global Equity Incentives study by PwC and the NASSP (National Association of Stock Plan Professionals).

However, 94% of companies said they would continue with regular stock options and restricted stock units rather than bring in anything new as employees are satisfied with them.

The study also said global companies find India to have one of the most challenging tax environments from a plan compliance perspective, along with countries such as China, UK and Australia. India and Argentina and two of the countries have seen the highest increase in equity grants compared with 2011, while the others include Australia, Hong Kong and Singapore. The study covered 351 multinationals across 30 countries.

"Globally, the appeal of performance awards seem to be on a decline among plain vanilla ESOP plans, while there is an increase in time-based options and restricted stock awards. Interestingly, this situation is reversed in India where there is a perceived increase in performance linkage in equity plans," says Padmaja Alaganandan, executive director - people & change practice, PwC India.

In 2011, the dip in equity grants was because of increase in performance awards while in 2012, the main driver will be to align compensation with business strategy while remaining on par with markets. With an improvement in the economy, firms want to pit themselves against competitors and roll out grants that show their standing in the hierarchy.