RIL likely to dole out ESOPs next quarter

Reliance Industries (RIL), the country's largest private sector company, has decided to introduce employee stock options (ESOPs) by the next quarter. The company, which has a workforce of nearly 40,000, will be the first in the domestic oil sector to launch this scheme.

Total options to be granted will not exceed five per cent of the paid-up equity of the company at Rs 1,393.5 crore. A back-of-the-envelope calculation suggests that as much as 69.67 million shares will be offered to employees as part of the scheme.

Shareholders have approved the issuance of 52.6 million equity shares of Rs 10 each under the ESOP scheme. However, sources said Reliance would initially issue one-fourth of these shares under the scheme. The top management might be offered the options first. "The options will be based on the staff's experience, performance and tenure," a source said.

When contacted, Reliance Industries executives declined to comment on the issue.

The Mukesh Ambani-controlled company has been planning to reward its employees with stock options for the past seven years. In fact, Reliance was among the first few to approve in principle an ESOP immediately after the market regulator Sebi introduced guidelines in 1999. The company had also received shareholders' approval for the launch of the scheme at the last annual general meeting.

ESOPs normally have a minimum period of one year between the grant and vesting of the options. The maximum vesting period might extend up to four years from the date of grant and the vesting might take place in one or more tranches.The exercise price "� the latest stock closing price on the day before the option is announced "� for the options would be market-linked. The exercise period would expire not later than seven years, the source said.

The Reliance stock today closed 1.64 per cent higher at Rs 1,363.15 on the Bombay Stock Exchange.