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Tatas likely to announce ESOP scheme for Air India employees by April 27 | Details

After India Today TV reported on April 21 that the Tata Group is working on an employee stock option (ESOP) scheme for employees of its newly-acquired asset, Air India, it was learnt the announcement could come by as early as April 27.

This is as per a deadline set by the government in the Share Purchase Agreement (SPA) it signed with the Tata Group at the time of handing over the then national carrier.

As per the SPA, sources said, the new buyer was 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 to its new owner, Talace Pvt Ltd, a subsidiary of Tata Sons.

The SPA also stipulated that the terms and conditions of the ESOP Scheme be the same as the market standard for companies, giving all employees, without any limits of designation, the option to purchase ESOPs.

Also, India Today has been told by sources that the government specified in the SPA that up to 3 per cent of the purchased shares acquired by the new owner will be up for grabs under the ESOP Scheme, and also importantly, at a price not higher than 1/3rd of the per share purchase consideration.

PRO-EMPLOYEE MOVE

In what could be seen as a pro-employee step, the government is also believed to have underlined at the time, that all employees of the airline would have the option to exercise their right to the ESOP Scheme, without any performance conditions or guarantees sought.

As per Indian law, employees have a period of one year after the grant of the ESOP scheme to vest the option. Additionally, Tata Group is likely to give its Air India employees one month’s time after vesting, to exercise the option.

With the announcement of the ESOP scheme for Air India employees, it will become the second company under the Tata Group, after Tata Motors, to have introduced the ESOP scheme for its employees.

On 25 October 2021, the central government, previous owners of Air India, signed a share purchase agreement with Tata Group, after its Rs 18,000 crore winning bid to acquire the airline. On January 27 earlier this year, the formal handover took place.

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