Air India is set to launch a new performance-linked stock options reward system for its employees to enhance productivity amid efforts by the Tata Group to revive the struggling airline. Eligible staff, including pilots, engineers, and senior management, will have the opportunity to purchase shares through stock options priced between Rs 4 and the market value at the time of allocation, as reported by Livemint.
The initiative, sanctioned at an extraordinary general meeting on February 13, aims to incentivize employees and synchronize their performance with the company’s expansion strategy. It is structured to recognize and draw skilled individuals to Air India and its affiliated entities.
The performance stock option plan, named PSOP 2026, is intended to acknowledge the eligible employees of Air India and its subsidiaries, both present and future, for their contributions and to inspire them to contribute to the company’s advancement and profitability, as stated in the resolution during the meeting. The plan is also aimed at attracting, retaining, and rewarding talent within the organization.
Air India will issue approximately 227.1 million stock options, equivalent to 0.25% of its total share capital, as new shares for qualified employees, according to a disclosure to the corporate affairs ministry on April 6. Additionally, Singapore Airlines holds preemptive rights to maintain its 25.10% stake by acquiring extra shares if necessary.
The vesting period for the stock options ranges from one to five years, signifying Tata’s intention to retain the services of its employees under this new incentive scheme. The eligibility, share allocation, and pricing will be determined by the nomination and remuneration committee, as per the report.
India’s other listed airlines, IndiGo and SpiceJet, have previously introduced ESOP schemes, while privately-held Akasa Air also operates a similar program. Air India had previously allocated shares to nearly 8,000 employees during its acquisition from the government in January 2022, as part of an Employee Share Benefit Scheme managed by SBICAP Trustee Co Ltd.
Under the new performance-linked scheme, employees may receive only half of the shares if the airline falls short of achieving 85% of its internal targets, aiming to reward performance and promote greater efficiency. This development coincides with Air India’s leadership transition following the resignation of CEO Campbell Wilson on March 30, who will continue until a successor is appointed, with his original term set to conclude in July 2027.
