Capgemini, the global technology services giant, has just unveiled its latest Employee Stock Ownership Plan (Esop), which aims to distribute up to 2.7 million shares among its employees. This bold move not only reflects Capgemini’s confidence in its workforce but also aligns with its broader goal of fostering a culture of ownership and performance.
The Esop is part of Capgemini’s continuous efforts to align its employees’ interests with the company’s development trajectory. Announced this week, the plan will affect nearly 97% of the company’s workforce globally, including the majority of its 175,000 employees based in India.
This article breaks down the key highlights of the Esop plan and what it means for employees, especially those in India. Here’s everything you need to know!
What is Capgemini’s New Esop Plan?
The new Esop plan from Capgemini is a share ownership initiative designed to provide employees with an opportunity to own part of the company. By offering 2.7 million shares, Capgemini plans to maintain employee ownership at nearly 8% of its total share capital.
Capgemini’s Esop will run from September 12 to October 1, 2024, with subscription and revocation opportunities occurring between November 12-14, 2024. This new Esop replaces the previous one launched in 2019, which is set to expire by the end of the year.
Focus on India
A key aspect of the Esop is its extensive reach among Capgemini’s employees in India, which forms a significant part of the company’s global workforce. By including a majority of Indian employees, Capgemini reinforces the importance of its Indian arm in driving business performance globally.
Key Benefits for Employees
- Equity Participation: Employees have the opportunity to own a stake in Capgemini, enabling them to benefit directly from the company’s growth and profitability.
- Guaranteed Investment Options: Employees will be able to participate in leveraged and guaranteed investment options, protecting them from potential market losses during the shares’ non-tradable period.
- Hedging Mechanism: To provide additional security, Crédit Agricole Corporate and Investment Bank will manage the offer and engage in hedging transactions.
- Capital Growth: The Esop gives employees the chance to take part in the company’s capital growth over the long term, strengthening their personal investment portfolios.
Timeline and Process
Here’s a brief breakdown of the key dates to keep in mind:
- Subscription Period: September 12 to October 1, 2024
- Subscription Price Announcement: November 7, 2024
- Subscription and Revocation Period: November 12-14, 2024
- Final Capital Hike: December 19, 2024
These dates are crucial for employees looking to take full advantage of the Esop.
Impact on Capgemini and Employees
Capgemini’s move to introduce the Esop in 2024 comes at a time when the company is facing a slight decline in its workforce. In the first half of 2024, Capgemini’s offshore headcount dropped by 7%, while its onshore headcount decreased by 2%. Despite these challenges, the Esop signals Capgemini’s long-term commitment to its employees, particularly in India.
By encouraging employee participation through stock ownership, Capgemini aims to foster a deeper sense of belonging and loyalty among its employees. Additionally, this strategy helps the company retain top talent and remain competitive in an ever-evolving industry.
Financial Performance of Capgemini
Despite workforce challenges, Capgemini reported €11.38 billion in revenue for the first half of 2024, reflecting a 2.6% decline at constant exchange rates. However, the company’s operating margin remained stable at 12.4%, and organic free cash flow surged to €163 million, demonstrating strong financial health.
This stable performance reinforces the significance of the Esop plan, which is likely to motivate employees to contribute even more to the company’s success, knowing they have a personal stake in the business.
Why Esop Matters to Employees?
1. Long-term Investment:
Esops provide employees with a way to invest in the future of the company they work for. Over time, as the company grows and performs well, the value of the shares can increase, resulting in financial benefits for employees.
2. Strengthens Employee Loyalty:
When employees own a part of the company, they are more invested in its success. This often leads to better performance, increased loyalty, and longer employee tenure.
3. Risk Mitigation:
Capgemini’s Esop provides certain safeguards, such as guaranteed investment options and hedging strategies, which help protect employees from potential losses.
4. Personal Financial Growth:
The Esop allows employees to build their financial portfolios by owning shares in a leading global firm, making it an attractive option for long-term wealth accumulation.
