Children For Sale
For as little as Rs 3,000, impoverished parents sell their children to adoption centres and unscrupulous operators in Andhra Pradesh, who in turn earn up to Rs 3 lakh from foster families. A look at the people involved, the law and where the process went wrong.

Amma Turns Red
J. Jayalalitha's hopes for contesting the elections have been dashed with the rejection of her nomination papers. But this does not deter her from stepping up her campaigning efforts for the AIADMK and assuming an aggressive stance.

Past Tense
The muted reaction of the Government to the massacre of the BSF troops raises many questions. A look at the past skirmishes between the BSF and BDR gives an insight into what led to the heightening of tension at the border.

Coming To Life
With the end of state monopoly, private insurance companies are offering wider risk coverage and better customer relations.

Starting Over
It's been three months since nature shook Gujarat, killing over 30,000 and shattering dreams. Despite government promises and generosity of individuals, rehabilitation is still to touch the lives of many. The story in pictures.

BUSINESS: STOCK OPTIONS

Zero Sum Game

The stock market slump has blown the whistle on the favoured tool for attracting and retaining employees

By Malini Goyal

For Balachander Sekhar, a 28-year-old IIT and IIM graduate, employee stock option plans (ESOPs) was the ticket to realising his dreams. Early retirement, a world tour, a farmhouse, a laid-back life with no need to chase savings, no pressures to get a hefty increment-he expected his ESOP to give all this and more. "I was hoping to make Rs 1-2 crore in three years from ESOP," he says. Confident, he chucked a promising job with an MNC to join a portal, Go4I.com. That was last year. Today, Sekhar is back in the brick-and-mortar world with a foreign bank. His ESOP worth: negligible.

In March last year, Ravi Mehrotra (not his real name) was allotted ESOP by NIIT Ltd. Trading at about Rs 1,600 in April 2000, the scrip zoomed to Rs 2,525 two months later. Still in the lock-in period, he could not do anything but sit back and feel good. "I was plain ecstatic seeing the stock price zoom to such a level," he says. His wife did the calculation: 1,000 shares multiplied by Rs 2,525 equalled Rs 25.25 lakh. Today, Mehrotra does not want to talk ESOP. His stock worth has plummeted to Rs 4.96 lakh.

It's all in the mind-the calculation, the rising value of the stocks and the consequent plummeting. But for those who have lived through the ecstasy and orgasmic highs of their company's share price, it is difficult digesting the dip in their stock value. "Emotionally, employees have gone through a roller-coaster ride," says Avneet Jolly of Hewitt Associates.

ESOPS FABLES How the value of stock options has eroded over time

Figures are share prices of companies in rupees

Offer price is the market price of a company's share when the stock option was announced.

Walk through the corridors of any infotech biggie, eavesdrop on any canteen gossip and you will surely get a more than passing reference to the stock market crash. As stock prices plummet, it is not just the investors who are mourning. The employees are moaning too. Not exactly investors, their fortunes too have got closely linked to the stock market performance of their company through stock options.

ESOPs are of various kinds but the most popular in India are ones in which an employee is allotted shares of his company at the market price and is given an option to purchase them after a certain period. The employee is free to either buy the shares or decline the offer at the end of that period. If he leaves the company before the end of the period he foregoes the option. Thus ESOPs work as a retention tool for companies.

ESOPs have been a big hit ever since the concept was introduced in India three years back. Peons at Infosys becoming millionaires, drivers at Satyam owning millions-such tales of quick success and easy fortune have become part of folklore. It became fashionable for companies to give out ESOPs, be it IT majors like Wipro, Infosys, HCL Technologies and NIIT, progressive Indian firms like Ranbaxy, ICICI, SRF, Dabur and, of course, the swelling number of MNCs here. Not to forget the dotcoms who whipped up a frenzy, offering attractive ESOPs as part of the pay-packet to lure professionals.

But the excitement has given way to depression. The gloom of bearish stock markets is already showing up at corporate corridors. "The demand for mid-sized cars in Bangalore is not as healthy as it was last year," says B.V.R. Subbu, director, marketing, Hyundai India. The city has probably the largest number of ESOP holders in the country. And it was where the symptoms started showing first.

It is not just money. ESOPs is fast losing their effectiveness as an employee retention tool. Says an ex-Wipro employee: "Whatever I lost on quitting the company, I more than made up in my new job." In today's bearish markets, employees are figuring out that they can pick up company stocks much cheaper directly from the market rather than through ESOPs (see graph).

While brick-and-mortar companies are feeling the heat, dotcomers are totally shattered. "I was bitten by the dotcom bug. The huge stock options were a major attraction," says Sekhar. He was not alone. Chasing ESOP dreams, many joined dotcoms, little realising that without a listing on the stock markets, the ESOP meant nothing. "We were making castles in the air," says Rajeev Saksena, an engineer and an MBA who quit The Indian Express to join the portal JobsAhead.com. Saksena still remembers the day when he got ESOPs. "I was excited. My boss personally handed over the letter to me complimenting my work and explaining its significance," he says. A third-party valuation put his stock value at a staggering Rs 65 lakh. "Today it's worth nothing," he says.

"It was a ruse by which a lot of companies cheated candidates," says Ronesh Puri, managing director of headhunting firm Executive Access. A number of dotcoms sold ESOPs aggressively to employees, often persuading them to take a pay cut. This not only meant a lower wage bill for a start-up but also made dotcom jobs attractive for risk takers. But, of course, dotcoms were more hype than reality-few survived the shake out and fewer came out with public issues.

But hr experts still believe in ESOPs. Says Deepak Gupta, managing director, Korn/Ferry, an hr consultancy firm: "ESOPs have survived many such market crashes in the US. They still hold." The stock market crash has underlined the fact that ESOPs make employees partners in the business, for better or worse. "ESOPs convert managers into long-term owners of the company," says Sanjiv Kataria, senior vice-president, NIIT Ltd.

And for those in gloom, here's a word of cheer from Aadesh Goyal, vice-president, Hughes Software: "If anything, the new low in the stock market is a good time to give stock options."

MetroScape

Focusing On Art
The brief for participants at
"Exhibit 'A' 2001" organised by the
200-member
Photographers'
Guild of India at the Nehru Centre, Mumbai, was clear—no advertisement and portfolio photos. more...

Looking Glass

Delhi Poster:
One Page Classics

Calcutta Pub:
London Pub

Bangalore & Mumbai Rock Concert:
Bryan Adams

West Bengal Chief Minister Buddhadev Bhattacharya reflected optimism about winning the state election when he spoke to INDIA TODAY Senior Editor Sumit Mitra at the CPI(M) headquarters in Kolkata, minutes before rushing off for campaigning.
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