Pay panel for CPSEs bats for ESOPs to keep talent

The third pay revision committee for central public sector enterprises (CPSEs) has recommended that all listed PSUs formulate an employee stock option plan (ESOP) to motivate employees and retain talent.
All enterprises should formulate an ESOP and 10-25 per cent of the performance related pay (PRP) should be paid as ESOPs, the panel suggested.
"ESOP being a concept beneficial for both CPSEs and its employees, the Department of Public Enterprises (DPE) should elaborate the mechanism in consultation with the authorities concerned to enable introduction of ESOP in listed CPSEs with empowerment to the board or administrative ministry to approve the same," it said.

The recommendations of the Justice Satish Chandra committee, which are to come into effect from January 1, 2017, will be placed before the Union Cabinet for approval.
The committee has also recommended a minimum pay of Rs 30,000 per month for executives and a maximum of Rs 3.7 lakh for CMDs.
If the recommendations are approved by the government, the minimum monthly salary of below board-level executives will increase to Rs 30,000 from Rs 12,600.

However, in the case of CMDs, the maximum monthly salary for Schedule A CPSEs will go up to Rs 3.7 lakh from Rs 1.25 lakh.

In the case of Schedule B, C and D CPSEs, the maximum monthly salary will be Rs 3.2 lakh, Rs 2.9 lakh and Rs 2.8 lakh, respectively.
Depending on profits, the PSUs are categorised into different schedules, with highest being Schedule A. There are currently 64 Schedule A, 68 Schedule B, 45 Schedule C and 4 Schedule D CPSEs in the country.
The committee has recommended that the rate of house rental allowance (HRA) will be revised to 27 per cent, 18 per cent and 9 per cent when industrial dearness allowance (IDA) crosses 50 per cent, and further revised to 30 per cent, 20 per cent and 10 per cent when IDA crosses 100 per cent. This relates to cities categorised in terms of population.

The panel recommended no change in the IDA pattern and the 100 per cent DA neutralisation shall continue to be applicable.
The revised IDA from January 1, 2017, shall be linked to All India Consumer Price Index (AICPI) (2001=100) series with the base of AICPI as on January 1, 2017, as per the quarterly average of AICPI of September, October and November 2016.
The committee has also suggested that the annual increment be retained at 3 per cent of basic pay.
It has further recommended that increment on promotion shall continue to be at par with the annual increment rate (3 per cent of basic pay).

The panel has recommended no change in the retirement age for CPSE employees.
The panel said 40 per cent of PRP will come from 10 per cent of a CPSE's incremental profit. Incremental profit is the increase in profit compared to the previous year's.
Profit making CPSEs, which can bear the cost of VRS with their own surplus resources, are allowed to implement the VRS policy by allowing compensation and ex-gratia on the revised pay scales proposed to be effective January 1, 2017.