Chola Mulls Profit-Sharing With Staff

City-based Cholamandalam Cazenove Mutual Fund, in order to retain its key employees, is learnt to be thinking on a profit-sharing arrangement with them. It is also looking at traditional performance-based incentives.

Industry observers believe that such moves by asset management companies (AMCs) are inevitable and will increasingly become the norm. The urgency to implement such schemes stems from the recent large-scale movement of people within the industry.

Cholamandalam's plans are still on the drawing board and details regarding eligibility and scope are yet to be finalised, say sources.

Kothari Pioneer, the country's first private mutual fund, had implemented an employees stock option plan (Esop). In the company, the two promoters, Pioneer group of the US and the Investment Trust of India, hold 47.5 per cent equity each, while the balance five per cent is held by employees.

 

Cholamandalam's move is being closely watched, as it is considering direct sharing of profits. As AMCs do not offer scope for listing, profit-sharing arrangements and performance-based incentives and/or bonus are the only way to compete and retain key people, says an industry analyst. Normally, Esops are indirectly linked to profits.