Tata Digital has implemented a new employee stock option plan (Esop) aimed at its senior executives as part of a broader strategy to enforce a performance-driven culture. This move, led by CEO Naveen Tahilyani, comes in the wake of significant turnover in the company’s senior leadership.
The new Esop plan was approved during the recent annual general meeting (AGM) of Tata Digital, which operates the Tata Neu superapp and owns online platforms such as BigBasket and 1mg. The plan includes a minimum vesting period of three years. Senior executives in specific grades will have their stock options converted into company shares, while others at the director level or below will receive cash based on their options.
This initiative aligns with Tata Digital’s strategic objectives, including revenue growth, enhancing consumer experience through a user-centric fintech platform, and achieving profitability to attract external investors. While some employees have welcomed the Esop plan, the response has been mixed.
Tahilyani, who took over as managing director and CEO in February, has been restructuring the senior management team, leading to several departures, including that of Myntra founder Mukesh Bansal. Executives who have left the company in the past two years are unlikely to benefit from the new Esop plan.
The AGM also approved the appointment of Tata Sons’ Chief Financial Officer Sourav Aggarwal to Tata Digital’s board. The new Esop scheme, effective from August 16, is part of a broader effort to align employee interests with company goals, attract and retain talent, and motivate employees to contribute to the company’s growth and profitability.
Tahilyani is known for his strict accountability measures and has been working to integrate Tata Digital’s various businesses, including BigBasket and 1mg, which continue to operate with a startup mentality. He has held meetings with the founders of these companies to address ongoing challenges, and Tata executives are now more involved in the boards of these firms.
In 2022, Tata Digital infused $200 million into BigBasket and helped 1mg achieve unicorn status with a $41 million investment. While both companies are expanding, their existing investors prefer raising debt over equity, avoiding external investors setting prices for valuable assets like BigBasket.