Satyam offers stock units to retain stars

HYDERABAD: In an initiative to retain star performers, IT major Satyam Computer Services has offered restricted stock units (RSU) to over 1,000 employees in leadership positions. The financial impact of the offer of 3.76 million shares of face value of Rs 2 each would be in the region of $40 million and spread over four years.

The company had announced its intention of offering stock units to select employees in the first quarter of this fiscal and, therefore, the annualised financial impact has been provided for in the guidance for 2006-07. The company’s compensation committee of directors recently approved the scheme. Apart from the stock unit scheme, the company has approved cash compensation or deferred bonus to its middle-level employees. Both initiatives attempt to bring about stability at the middle and top levels of management.

Satyam has total employee strength of 34,405 as on quarter ended December 2007. Its attrition levels stand at 17.62% as on Q3, 2007. Nearly 17% of the workforce will be beneficiaries of the restricted stock units and deferred bonus schemes. Satyam’s one-time measure of restricted stock units comes at a time when most IT companies have stopped offering employee stock options.

Satyam discontinued Esops in October 2004. The RSUs are exercisable over four years with equal vesting in each year. To that extent, it would ensure stability and an anticipation of long-term association from senior leaders in the company.

Satyam vice-president (HR) T Hari told ET, “the scheme is very different from the conventional Esops which were offered to all associates joining the company. The RSU is restricted to select employees in the leadership positions and the eligibility is linked to performance. The scheme has covered nearly 75% of the population of 1,400 who will be entitled to number of units varying between significant and marginal.”

The positions covered for the RSU scheme is from deputy general manager upwards. Employees across various functions and nearly 30 geographies are covered under RSU scheme. The cash compensation scheme would be offered to about 5,000 middle-level associates amounting to 75% to 100% of their annual compensation. The deferred bonus is also payable over four years.