New Delhi, May 27 (IANS): ESOPs continue to be pre-dominantly concentrated in the Information, Communication and Entertainment (ICE) sector and participation from Manufacturing and Consumer Goods (MCG) and financial services FS sector has seen an increase over a period, as per the latest KPMG ESOP survey report titled 'ESOP survey report 2021'.

KPMG in India, through its Employee Stock Option/Ownership Plan (ESOP) Surveys in 2011 and 2015, endeavored to present insights on leading industry practices, differentiators and trends based on its analysis of data collated from a range of organizations.

There has been increased activity in the ESOP domain both in India and globally since then. Considering the changing regulatory environment, we re-launched the survey to understand the current trends.

Parizad Sirwalla, Partner and Head - Global Mobility Services, Tax, KPMG in India said, "The current market situation and economic disruption caused by the Covid-19 pandemic has led several companies to rethink their compensation strategy and align the same to long-term corporate growth. In order to combat these unprecedented times, corporates around the globe are looking at ways and means to retain high performing employees and at the same time, being neutral from a cash flow perspective. One such option is to introduce/continue with equity-based compensation which not only helps in retention but also helps organizations manage cash flows which can then be utilized to fund day-to-day business operations".

ESOPs have been conventionally used as a compensation tool by Indian and multi-national companies. The survey indicates that companies consider ESOPs as an incentive tool which enhances productivity, motivates employees, creates sense of ownership amongst employees and thereby increases employees' interest in the company's overall performance. Many Indian companies with overseas operations are increasingly awarding equity incentives to attract and retain talent.

The current market situation and economic disruption caused by the Covid-19 pandemic has led several companies to rethink their compensation strategy and align the same to long-term corporate growth. In order to combat these unprecedented times, corporates around the globe are looking at ways and means to retain high performing employees and at the same time, being neutral from a cash flow perspective. One such option is to introduce/continue with equity-based compensation which not only helps in retention but also helps organizations manage cash flows which can then be utilized to fund day-to-day business operations.

"The recent trends of multi-fold deals of management buy-outs coupled with economic environment has been a driver for many companies (including start-ups) to consider ESOPs as a compensation strategy", added Parizad Sirwalla.