MUMBAI: Private equity (PE) firm, Blackstone, which acquired packaging products maker, Essel Propack Ltd, last year, has offered the latter's executives an exit-linked incentive plan where select employees of Essel can make up to $89 million, or ₹672 crore, if Blackstone exits the firm at certain predefined return thresholds.
Blackstone, which owns 75% stake in Essel, through an entity called Epsilon BidCo Pte Ltd, on Monday sought shareholder approval on the proposed Exit Return Incentive Plan (ERI), according to a filing with the stock exchanges.
The PE firm had paid around ₹3,200 crore, or $460 million, to acquire majority stake in Essel Propack from its promoters as well as from public shareholders through an open offer.
Such exit-linked incentive plans are used by PE firms to attract top industry talent to their companies and ensure alignment of interests between the senior management and investors.
"The ERI Plan will reward certain identified employees of the company and its subsidiaries at the time that Epsilon disposes all its interests (direct or indirect) in the company (Exit). The ERI Plan is intended to be a means to incentivise and motivate such employees for working towards the growth of the company and to create value for its shareholders and other stakeholders," the company said.
The eventual quantum of the cash award will depend on various factors such as the timing of the exit, the rate of return generated at exit and multiple of invested capital.
"Subject to Epsilon achieving the identified return thresholds, the indicative amount of cash awards for the eligible employees (collectively) may range between 2.5% and 4.2% of the net proceeds realised by Epsilon from the exit," the company said.
At the lower end of the targeted returns range, the total cash award could be as much as $22 million, while the maximum cash award under the incentive plan could be $89 million.
"No pay-outs will be made under the ERI Plan if the identified threshold returns are not satisfied in an Exit," the filing said.
The company did not specify the number of employees eligible for the incentives under this plan.