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Infosys stops ESOPs, 'staff not keen'

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March 16, 2004 14:58 IST

Maintaining that the decision to suspend the ESOPs was taken way back in May 2003, the Nasdaq listed Infosys on Tuesday said it is currently debating on the issue in view of the absence of proper accounting methodology and employees preference to pay hikes over ESOPs.

"The withdrawal of ESOPs is not new, it was suspended in May last year. We need to figure out how it is accounted for as we are listed in both India and the United States and the accounting methodology is quite different in both the countries," Kris Gopalakrishnan, COO and deputy MD, Infosys, told newspersons on the sidelines of a CII event in New Delhi.

"Currently we are debating on the issue and there is feedback within the company that pay hikes are preferred to ESOPs," he added.

He did not disclose till what time the scheme would be in suspension saying till the company decides on the issue, it would remain suspended.

Infosys, the pioneer of ESOP scheme as a method to retain talent and loyalty within the organisation in India, had to keep the scheme in abeyance as there is a lack of model to account ESOPs and the clashing guidelines of Indian and US regulatory agencies on pricing these stock options.

"The current volatility of the stock market is also another reason for us to relook at the scheme as employees are preferring pay hikes over ESOPs," Gopalakrishnan said.

The key part here is Infosys has to figure out on how ESOPs are treated and put on the balancesheet, he said.

According to the Securities and Exchange Board of India, the ESOP prices to be taken at an average of two weeks value, while in US GAAP it is at the rate at which it closed the previous day, said Infosys.

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