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JSW Steel plans to facilitate share purchase of about ₹420 crore from the secondary market as part of a new employees stock option plan (ESOP). The company has chalked out a new voluntary stock option — Samruddhi Plan 2019 — for its 12,000 staff members.
As part of the plan, the company has formed JSW Steel Employees Welfare Trust that will acquire 1,24,97,000 equity shares, representing 0.517 per cent of the issued equity share capital of the company from the secondary market.
Each eligible employees in the grade of L01-L15, excluding the promoter group, would be allotted 1,000-2,000 shares depending on their work performance and number of years of service in the company.
Once accepted by the employee, the Trust will facilitate them to get bank loan for purchase of the shares which will be credited into their demat account. The purchased shares will have a lock-in period of two years.
JSW Steel will bear 75 per cent of the interest cost on the loan availed by the employees to purchase the shares. The shares will be priced at the market rate as on the purchase date.
Encouraging response
Seshagiri Rao, Joint Managing Director, JSW Steel, told BusinessLine that the initial response from the employees to the stock option has been very encouraging and it will be closed in the next 30 days.
The earlier employees stock option scheme covering only senior staff above the Senior Associate Vice-President level had delivered good returns and there was demand from other workmen for similar benefit, he said.
While taking care of the employees’ interest, Rao said the company had opted for secondary market purchase rather than making a primary share allotment as it does not want existing investors to suffer, though the quantum of allotment would be minuscule.
The Samruddhi plan is intended not only to motivate employees to create a sense of ownership but also to retain talent in the organisation as the allotted equity shares would enable employees share the value they create for the company, he said.
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