ONGC to issue Esops post IPO

ONGC is going to offer a stock option to its employees (ESOP) after its public issue. The oil major's chairman and managing director Subir Raha said: "We are seriously looking at ESOP as an incentive to our employees. The company may hire a consultant to devise the package."

Developing a proper incentive scheme for an upstream company is not an easy job and would require the help of people with expertise in the field, Raha pointed out.

"It will take some time and it will not be possible before the public float. After a comprehensive package is evolved, we will take it to the board for consideration," he said.

Observer said, after the spate of ESOPs by information technology (IT) companies at the time of the tech boom a couple of years back, it could be the turn of oil and gas companies to tread this path now.

"As the oil sector opens up and new entrants come in, retaining human resource would be a challenge for state run companies where promotions and increments have been liberal. While this has lead to a large pool of uninspired mid-level executives, talent and efficiency remained unrewarded in many cases. Given that stocks of oil companies are in favour at the bourses, companies may offer ESOPs to attract and retain talent," an observer said.

ONGC has a 39,000-strong workforce out of which 23,000 are mid-level executives. The company recently carried out a VRS where 700 employees were separated.

Given the myriad nature of jobs in an upstream company like ONGC, devising a fixed and variable pay structure is a challenging task.

Moreover, the company is now expanding into refining with MRPL and will soon start retail marketing as well.