Severance packages take form of cash/stock options
India Inc’s making sure layoffs post-M&As are not such a bitter experience. Employees are being handed out lucrative severance packages and also rehabilitation initiatives.
By Bhanu Pande & Amanpreet Singh, TNN |
NEW DELHI: India Inc’s making sure layoffs post-M&As are not such a bitter experience. Employees are being handed out lucrative severance packages and also rehabilitation initiatives.
Severance packages kick in when there is termination ‘with cause’. The cause includes performance and integrity issues. “While integrity issues are clear-cut, performance parameters are defined in the contract. Lack of performance, for at least quarters with warnings, need to be highlighted before cause can be established,” says Anindita Banerjee, principal consultant, Stanton Chase.
Severance packages can either be exercised in terms of cash or in the form of collapsible stock options. Today, analysts say, top-level executives aggressively negotiate on a clause that clearly outlines the circumstances effecting severance and the amount.
“There are executives even in domestic companies who have pre-negotiated severance packages as high as a $1m and the companies have actually provided for that in the balance sheets,” says Atul Vohra, managing partner, Transearch India.
Earlier, Standard Chartered let go of its CFO to replace him with an expat; he was given a handsome severance package for it.
Similarly, HSBC India’s second separation scheme in ’03 saw the company shell out nearly Rs 10-35 lakh for its eligible employees, who had either completed 10 years of service or attained the age of 40. Investment professionals have described this package to be twice as good as that offered by other banks in the industry.
ADVERTISEMENT
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
