Honasa Consumer Limited, the parent company of the popular beauty and personal care brand MamaEarth, has announced a significant development for its employees.
On August 2, 2024, the company’s Nomination and Remuneration Committee approved the grant of 3,97,169 stock options to eligible employees under the Honasa Consumer Limited Employee Stock Options Plan – 2018 (ESOP – 2018).
The ESOP grant is a strategic step by Honasa Consumer Limited to foster greater employee ownership and incentivize performance.
The stock options granted are expected to cover a total of 3,97,169 equity shares of the company, each with a face value of Rs. 10.
The options are set to convert into one equity share of the company per option, thereby potentially increasing employee stake in the company.
The pricing formula for the stock options varies. Of the total options granted, 373,472 options have an exercise price of Rs. 10 per share, while 23,697 options are priced at Rs. 262.41 per share.
This differentiated pricing strategy aims to reflect varying performance metrics and levels of seniority within the company.
The stock options are structured to vest based on the criteria set out in the ESOP scheme, which includes individual performance and company targets.
Employees can exercise vested options at any time during their tenure or within 90 days following their last working day at the company.
This flexible exercise period is designed to accommodate employee career transitions and ensure they can benefit from their stock options even after leaving the company.
While no options have yet been exercised or lapsed, the potential for 3,97,169 equity shares to be issued highlights a substantial increase in the company’s share base, should all granted options be exercised.
This move is expected to have implications for the company’s diluted earnings per share, though specifics are not yet available.
Honasa Consumer Limited’s approach to employee stock options reflects its commitment to aligning employee incentives with the company’s long-term goals.
By linking compensation to the company’s stock performance, the company aims to drive motivation and reward employees for their contributions to the company’s growth.
As a prominent player in the beauty and personal care industry, Honasa Consumer Limited continues to innovate and expand its portfolio, which includes household names such as MamaEarth, The Derma Co., Aqualogica, and Ayuga.
Other strategic acquisitions, includes BBlunt and Dr Sheth’s, further strengthen its position in the market and diversify its offerings.
This stock option grant is part of a broader trend in the corporate world where companies use stock options as a tool to attract and retain talent while promoting a culture of ownership and accountability.
Recently, Delhivery announced allotment of 1,66,122 employee stock options (ESOPs) while Zomato announced allotment of more than 35.17 lakh ESOPs.
