Time Scale or Stock Option?

Things change over time. Generations have been witnessing change in many aspects of life. Advancement in communications has led to sea change in Trade and Commerce just as in any other walk of life. 

Fifty or sixty years ago, one of the major problem confronting youth in independent India as well as in other parts of the world was unemployment. Second World War had destroyed economies of most of the countries in the world. Countries taking direct part in the war suffered worst damage. Even the other countries which did not take part in the war directly suffered as well. Many of the able bodied young men were either killed or wounded in the war, especially in Europe. Agricultural lands became barren due to vagaries of war and no crops being grown for five to six years. End of the war resulted in loss of several jobs as well. Unemployment emerged as a major issue all over the world. Efforts to stimulate the economies and create jobs became the primary goal of administrations throughout the globe.

Governments were the major employment providers in those years. Finding a job in some government wing provided a stable and regular income for workers and their families. Manufacturing industries came in next and provided thousands of jobs. These jobs also offered post-retirement benefits in the form of pension and provident fund benefits. A young man who got a job in a government department or a factory was believed to have settled in life. Parents heaved a sigh of relief. As most of the women folk still remained housewives, girls were not competing for a share in the job market. Lower education level among girls in many countries also contributed to this. Getting a secure job led to immediate marriage. This led to One Life - One Job - One Wife life cycle. Get a job in the 20s, work for another 40 years in the same job and retire first from the job and then from life became the norm.

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Severe competition in the job market ensured that the employer decided what to pay. The candidates seeking employment were happy to get a job first. Total emoluments were far from the issue of reckoning while joining the job. A passenger standing in a bus stop would like to get on the foot board of a crowded bus and get moving. Once on the foot board, he would push his way to find a standing space inside the safety of the bus. Once standing inside the bus, the next goal is to find a two-by-three or three-by-four seat. Once that is secured, window seat would be coveted. This was true of securing jobs as well. May be a temporary job at first, then quasi-permanency and finally a confirmed job. Then the role of trade unions came to bargain for better rights. Employers decided what should be the pay and which are the grades of employees. 

All employees were paid equal salary at a particular level of work. Seniority became an important distinguishing factor now. All employees working at the same job description were paid equally, but there had to be a small distinction between someone who joined that level now and someone else who did the same job for several years. Annual increments and Time Scale ensured that this was taken care of. At a particular level, all employees got the same salary with a small fixed raise each year called increment, which continued for 20 or 25 years known as time scale. Horses and donkeys were paid the same salaries. Even bargaining trade unions were restricted to improvements in increments and time scales. The world thought that an equilibrium was found and things were satisfactory for some time.

Better performing employees had to be rewarded to keep up morale. Promotion from one scale to another fulfilled this need. Employees worked for getting promotions so that they could move from one time scale to another which would ensure a jump in their monthly emoluments. Senior level employees were rewarded with other benefits called Perks. A residential quarters or a motor car were the most common perks. 

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Advancement in technology leading to development of trade and commerce brought in requirement of more skills in job markets. Sales and Marketing needed its own skill sets demands. More adventurous way of life attracted the younger generation. Mass recruitments through announcements and notifications gave way to campus and private recruitments. Higher skill requirements compelled employers for scouting suitable candidates from among the workforce in competitor organisations. Educated and skilled girls flooded the job markets and started competing equally with men. Waiting for annual increments and moving from one time scale to another did not enthuse the younger generation any longer. Recruiting new talent became a primary need for growing companies and industries. Head Hunters made their debut and poaching of employees in competitor entities turned out be an accepted practice. Working in a job continuously became a negative point now. Principle of being settled in life itself became unsettled. If someone did not change the job for five years, questions were raised about the person's capacity to secure a better job. "Did he/she not get any other offers so far?" became a normal question!

Pension and Provident Fund benefits became less important as retirement at a certain age itself lost relevance. Older people started working even after superannuation. Younger people started believing in earning well in the earlier years and spend time to pursue other interests in life in late 40s or early 50s. They believed in building their own portfolio and financial planning. 

As a natural corollary of these developments, employees became aggressive and turned out to be equal partners in job discussions. "What should be the emoluments?" became a point of negotiation between the candidate and the prospective employer. "I give this" and "I need this" led to " We settle for this". Along with other factors and considerations, "Signing Bonus" entered as a tool to compensate a candidate changing the jobs and entering a new position. Annual increments gave way to pay raises and annual bonuses. These bonuses were not a general annual gift to all employees. Instead it became a confidential issue between employer and the employee. Persons working in the same positions in an organisations got different annual emoluments. Time Scales departed because nobody, neither the employer nor the employee, even thought of a 20 or 25 years timeline!

Rewarding good performers had to find a new method since promotions were not enough now to retain the right talents. Managements of large corporates started giving a part of the stake in the ownership of the companies to senior level functionaries. This served twin objectives; rewarding the better performers as well as ensuring loyalty during the period one worked with the organisations. Employee Stock Options (ESO) became a part of the annual pay packet. New employees could now see themselves as millionaires in the ESO mirror. It was not a image in the mirror, many indeed became rich and famous. Some of them started their own companies in due course. "Start Up" became the buzzword in the commercial and financial markets. The era of start ups is indeed now progressing very fast.

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Everyone knows about Amazon. If someone were to ask a school going kid what is Amazon, the answer would be different. It is no longer a major river in South America but a company that delivers a parcel to your house. Many housewives today cannot sleep unless they had at least one parcel delivered by Amazon to their house. It is a big multinational company focusing in e-commerce, cloud computing and Artificial Intelligence and based in Seattle, Washington, USA. It is the largest e-commerce market place in the world, both by revenue and market capitalisation.

The growth of Amazon is indeed baffling. The company went public in 1997 and the shares made a debut at $ 18 per share. The company made three stock splits (bonus issues) within 15 months. A 2:1 stock split in June 1998 was followed by another 3:1 in January 1999. One more 2:1 came up in September 1999. A $ 100 investment got 5 shares in public offer. 5 shares became 60 shares within 15 months. The share price crossed $ 2050 on September 2018 making it the second $ 1 trillion company, closely following Apple which crossed $ 1 trillion mark in August 2018. At that point, $ 100 invested in 1997 was valued at $ 1,20,762 giving a return of a whopping 1,20,000% in 20 years! Promoter Jeff Bezos sold $ 1 Billion worth of shares recently and still holds about 16% shares in the company, making him the richest man in the world. Amazon shares have presently faced a dip and still quoted at $ 1,632 today. One year projection for share prices is $ 2,137 and 5-year projection by market analysts is $ 4,313. The graph shown above is the Amazon share price graph over the years.

Amazon is one of the companies known to give stock options to its employees. Let us take a hypothetical case of a young aspirant taking a job in this company today. What should be the option - to take a higher salary in lieu of stock options or settle for stock options and hope for the best? Stock options are a small part of the package at junior levels. From the history of the company, stock option appears great. 

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Is stock option the best in all cases of securing jobs or while changing jobs? One cannot be so sure. How to become a millionaire? This question has a wonderful answer. Start as a billionaire and enter the stock market. You are sure to become a millionaire very fast, is the answer. Thousands have made millions in the stock market. Millions have become paupers at the same time. Stock market investments and trading is not for all. 

Want to try your hand in stock market investing or trading? Investopedia offers "Free Stock Simulator" where one can trade in a virtual environment without fear of loss. After practicing and learning for sometime, and gaining confidence one can venture into real trading in stock markets.

Playing in the share markets is a wonderful pastime. If you succeed in the venture, you become rich and a financial wizard. If you fail, you can become a philosopher!

Send Him Here First

The ongoing Prayagraj Kumbh Mela is one of the biggest religious congregations in the world. The 48-day festival starting form "Makara Sankranthi" day and concluding on 4th March, 2019 attracts over 150 million devotees from all parts of the world. The congregation is not only the biggest but also exceeds the populations of several countries in the world put together. Kumbh Mela is held in four cities (Haridwar, Nashik, Ujjain and Prayagraj) by rotation depending on the celestial position of the planets. The belief is that the heavenly nectar obtained by churning of the milky ocean was being carried in a sacred pitcher, when a few drops fell on earth in these four places. As with many things linked to faith, the enthusiasm of the congregation is seen to be believed.

During the last fortnight I had the occasion to talk to half a dozen friends who happened to attend the Kumbh Mela this year. From their unanimous reports it is found that the arrangements made this year were fantastic and unprecedented. The usually uncontrollable crowds were managed very well and the army of volunteers ensured that cleanliness was maintained to the maximum possible extent. It is reported that the volunteers were moving around with baskets in their hands to remove any unwanted item falling on the ground and move them away to the dust bins. There was also more self-discipline among the congregation and clean environment consciousness was visible all-round the mela areas.

Visitors to Varanasi during this period have also reported that many encroachments around the Kashi Vishwanath Temple have been cleared and the path from the river Ganga to the temple is now smooth and easy. Work is still going on but the effects are already visible. Shape of these temple towns, which were unfortunately known for the filth and foul smell, is indeed changing. One can only hope that this development will find its logical conclusion and cleanliness and godliness will be seen together in future.

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It is common knowledge that River Ganga is highly revered and is referred as Mother Ganga (Ganga Mai) or Ganga ji. Uttarakhand High Court in a judgement last year gave the status of a person to Ganga and Yamuna rivers and decreed that these rivers have the same rights as persons. There are many stories about Ganga river in our vast literature.

It is believed that Ganga was born when King Maha Bali washed the feet of Lord Vamana before granting him three feet of land as promised by the King. When the Lord lifted his leg to cover the entire upper worlds, the edge of his foot finger nail cracked the shell of the universe and Ganga flowed from there. Ganga was held by Lord Shiva on the whiskers of his head and became Gangadhara. Taking a dip in River Ganga is a life long dream of people who live far away from the flow of the river. It is also believed that taking a dip in the holy river burns away accumulated sins and paves the way for heaven.

There is a very interesting story about River Ganga in the "Kartika Masa Mahatme", the month that follows Deepavali festival. There was a very devout person, Gangadas, living on the bank of the River Ganga. He had taken a vow that he will not eat anything on any day unless he visits the river and bathes in it. For years and years he sincerely followed this ritual. His entire life revolved around The great river. Due to some reason, he had to once go to another place away from the river. He tried his best to avoid the trip so that he would not miss his daily bath in the river. But he had to go. He decided that since he could not take bath in the river on those days of travel, he would not accept anything to eat from those who have not taken a dip in the river.

Gangadas followed this rule rigorously for several days. On the way back he had to stay overnight in one of the places. He had heard from people coming to his place to bathe in River Ganga that a person there, one Bhakta Das was running a guest house for pilgrims to stay overnight and rest. He had also arranged to provide them lunch on regular basis. All pilgrims taking that route would stay in the guest house for a day, take rest, have lunch and thereafter resume their journey. The news of service rendered by this persons had spread far and wide and our Gangadas had also heard of him. Gangadas decided to stay in Bhakta Das's guest house for a day and resume his journey.

Bhakta Das came to know from his staff that Gangadas was staying overnight in his place. Next morning Bhakta Das visited Gangadas and told him, "I had heard of your devotion to Mother Ganga. Today I am indeed blessed to see you in person, one who has seen and bathed in Mother Ganga regularly for so long. I request you to be my chief guest at today's prasad ceremony and bless us all". Gangadas was happy and agreed to the proposal. 

After the rituals on the next day when all the traveling guests had assembled to have lunch, Gangadas asked Bhakta Das when he had last visited River Ganga. Bhakta Das was very apologetic and said that he had not seen the River even once in his life as he was unable to move away from his guest house lest it will cause inconvenience to the travellers. His dream remained a dream. Gangadas became very angry and shouted at Bhakta Das. "What? You have not bathed in the Mother River even once? Don't you know that I do not accept food from anyone who has not bathed in the River Ganga? One should not even see your face", he said and walked away without listening to the pleadings of Bhakta Das and others.

Gangadas returned to his place and went to the river next day for his usual bath in the morning. To his surprise he found that he could not see the river and its waters. Others were going to the river but he could not see the river waters. Overcome by deep grief he prayed to the Mother River. After much pleadings he heard a voice which said, "You have insulted a true devotee of the Mother River. Bhakta Das might not have come here, but he has helped thousands over the years to come here and realise their dreams. He has earned much higher blessings due to this than whatever you have earned. By insulting such a person you have forfeited the right to see Mother Ganga".

Gangadas realised his blunder and begged the river to forgive him and pardon his mistake. The voice now said, "If you want to atone for your sins, go back to Bhakta Das. Take over the duty of managing the guest house for sometime and relieve Bhakta Das to come here and realise his life's dream. Send him here first. Once that is done you will regain your eligibility to see the river again".

Needless to say, Gangadas dutifully did the same and atoned for his lapses. Bhakta Das also achieved his long time wish.

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Whatever service is done to serve a noble cause is indeed worth as much as doing the noble deed oneself. Many have said this before. That is what John Milton also meant when he said, "They also serve who only stand and wait".