Through a Trust, both companies will buy shares for ₹1,050 crore from the open market
JSW Group companies, JSW Steel and JSW Energy, have announced a unique stock option plan worth ₹1,050 crore at the current market value. Both the companies, through an Employees Welfare Trust, will buy the requisite shares from the open market for allotment to 15,000 employees on the company’s payroll, right from the lowest workmen in the factory to the highest level employee. This will have a lock-in of four years.
Employees will get 25 per cent each of the vested shares in the second and third year at ₹1 each while the remaining 50 per cent will be given in the fourth year.
JSW Steel, through the Trust, will buy 1.3 crore shares or 0.54 per cent of the share capital for about ₹950 crore while JSW Energy will buy 32 lakh shares or 0.2 per cent, worth ₹100 crore.
The lower grade employees will get 60 per cent of their annual cost to company as ESOP while it will be 20 per cent of CTC for top level employees. The share allotment would vary between 1,000 to 2,000, with the low grade employees getting the maximum allotment.
On an allotment of 1,000 shares, JSW Steel employees have to pay ₹1,000 and it would be valued at ₹7.50 lakh at the current market price of ₹750 a share.
Dilip Pattanayak, President-HR, JSW Group Corporate told BusinessLine that the unique ESOP was launched on Group founder OP Jindal’s 91st birth anniversary to realise his dream of wealth creation for employees and tying it up with the fortunes of the company they work for.
If an employee is allotted 1,000 shares and he quits the organisation in the third or fourth year, the excess shares accumulated in the Trust will be sold-off at the end of the year as per SEBI guidelines, he added.
The time frame for the acquisition of stocks has not been decided yet, but it should be sooner than later as companies have made public certain growth projections, which may push up the share prices, he said.
In 2019, JSW Steel facilitated a share purchase of about ₹420 crore from the secondary market as part of its voluntary ESOP — ‘Samruddhi Plan 2019’ — for 12,000 staff members.
Depending on performance, employees were allotted 1,000-2,000 shares at ₹232 a piece with a lock-in of two years. It also arranged a loan of ₹2.32 lakh to ₹4.64 lakh for employees to fund the share purchase and borne 75 per cent of the interest cost.
Come September, employees who have been allotted 1,000 shares, can pay about ₹13,000 for 25 per cent of the interest cost to release the locked-in shares. If off-loaded in the market, they can make a profit of about ₹5 lakh since the shares are trading at about ₹750 in the last week.