The SEBI chairman has in recent utterances stated that stock options to employees at a discount is a step in the right direction. This line of thought is definitely the need of the hour, atleast in the Indian context. It would indeed be better to issue the stock options which would help inculcate an attitudinal change in the workforce, rather than face some of the dire consequences. It has been a habit with PSU employees to forcibly get shares at a huge discount to the market price without doing anything in particular to deserve the largesse.A case in point could be the occurrences at the two navratnas, namely IOC and VSNL. IOC employees successfully managed to blackmail the owner, which in this case is the government of India.
Trying to take a leaf out of their book are the VSNL employees, who made a brave attempt at getting the shares at Rs 180 each when the ruling market price was above Rs 900.
Even the goings on in some of the state government companies are no exception. At the time of its IPO,which was priced at a Rs 100 premium, employees of TamilNadu Newsprint and Paper Limited (TNPL) demanded firm allotments at a discount. Employees used the strong arm tactic of striking work to get the management to accede to their demands, albeit without success.
The major differences between stock options and the instances of blackmail mentioned above is that the options are given to retain the performing employees. Thus if used solely for human resource driven industries like software and NBFCs, this tool could be a boon to both the employer as well as the employee.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
