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With the market recovering and stabilizing in 2014, ESOPs became very popular in the financial sector. ESOPs are a tool for the retention and motivation of employees, and the return to strong markets encouraged firms in the financial services to issue ESOPs to retain their top talent. The ESOP retention tactic was not just popular with private banks, but are also became more popular with state-owned banks. This is evidenced in the example of the Bank of India who considered issuing ESOPs to their employees. Public banks have difficulty retaining talent, compared to private financial institutions, and are hoping their ESOP’s will have a positive effect on the retention of their talent pool.

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Take away:

  • Post 2008, talent is less likely to be incentivized by loyalty. ESOP’s are a more attractive mechanism to retain talent.

 

 

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