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This story is from July 29, 2016

Infosys will grant shares to employees for 4-5 years: HR head

Infosys, which recently granted stock units to employees after a gap of 13 years, said it will give these units every year for the next 4-5 years so that employees feel a sense of involvement in the growth of the company.
Infosys will grant shares to employees for 4-5 years: HR head
Infosys, which recently granted stock units to employees after a gap of 13 years, said it will give these units every year for the next 4-5 years so that employees feel a sense of involvement in the growth of the company.
BENGALURU: Infosys, which recently granted stock units to employees after a gap of 13 years, said it will give these units every year for the next 4-5 years so that employees feel a sense of involvement in the growth of the company.
In the first grant, 250 to 500 stocks units have been given to 7,800 mid-level managers, consultants and technical leads – that’s about 25% of the employees in those categories.
The stocks will vest over four years, with 25% of units vesting each year. A vested stock can be sold by the employee. The stocks are being given at par value (Rs 5). This means the value of the total shares being granted to each employee varies between Rs 2.68 lakh (for those getting 250 shares) and Rs 5.36 lakh (for 500 shares), given the share price of Rs 1,077 on Thursday. What the employee actually gets will depend on the share value on the day she sells it.
“We need employees to be a part of the growth journey of the company. It’s not a one-off grant. We want to do it every year and at this point, we are looking at giving units to employees over the next 4-5 years. Most equity plans work on a continuous basis and that’s when it kicks in huge benefits for the employees,” Infosys group HR head Krishnamurthy Shankar told TOI.

Shankar said the value of the shares granted is equivalent to 10-15% of the employee’s salary. He said if a person gets these grants every year for the next four years, the value of the total shares she holds could be equivalent to 60% of her salary. Senior level executives will be among those given stock grants in the next round. Shankar said the employees granted shares were selected after a rigorous examination of their performance over the past three to five years, and their potential.

IT companies are beginning once again to offer stock units. Last year, Hexaware Technologies approved the allotment of 2.81 lakh restricted stock units to employees at a price of Rs 2 each.
Infosys has received board approval to offer 24 million shares (1% of total shares) to its employees. The company’s move comes at a time when it has reported, in the June quarter, its highest attrition in nearly five quarters. Hansa Iyengar, IT analyst in London-based Ovum Research, said the grant seems like an effort to control attrition rates – most of those leaving are people with 3 to 5-plus years of experience who are considered critical in projects. “There had been an initial slowdown in attrition, but this has picked up over the last couple of quarters especially in the light of strong bonuses and incentives being offered by competition and the abundance of opportunities in the market,” Iyengar said.
Ajit Deshmukh, managing director of investment banking firm Equirus Capital, said the grant is not just symbolic. “The management definitely sees an upside to build its talent pool and Sikka (CEO Vishal Sikka) has lifted the morale of the employees that was downbeat a few quarters ago," he said.
Anandorup Ghose, partner – talent & rewards in Aon Hewitt Consulting, said Infosys’s reintroduction of stock grants “puts them back in the same league as other industry leaders."
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