An innovative way to gain productivity and retention benefits is to invite employees to invest in your business through a share plan.
With Employee Share Ownership Plans you can;
- Structure your business so everyone shares in its success
- Retain as much or as little operational control as you want
- Preserve your business by leaving it in trusted hands
Employee Share Ownership Plans (ESOP)
Employee Share Ownership Plans (ESOP) are increasingly being used by business owners who want to gain immediate term productivity and engagement benefits while providing longer-term stability for their business.
An ESOP is a mechanism to allow employees to part own the company they work for.
Advantages for you as the business owner;
- You can attract and retain high calibre staff by offering a direct stake in the business
- When you want to move on from your business an ESOP can be an effective and efficient way to transfer ownership
- Save tax by making payments to the ESOP that are deductible
Advantages for your employees include;
- Providing a savings vehicle where they can accumulate savings, acquire and hold shares.
- Creating a sense of community as employees feel more committed to ensuring the business thrives
- Save tax by purchasing shares from pre-tax dollars
How to set up an ESOP
Getting your ESOP right is an important process – you need it to be attractive to your employees as well as support your business objectives. It has to be cost effective and easy to implement.
Above all the most important thing is to have a completely transparent and easy to understand mechanism so that employees are clear on what they are participating in.
After extensive research the ESOP we use and recommend is called a Peak Performance Trust (PPT).
A Peak Performance Trust works like this;
- You as the employer first create an investment trust (we do this for you).
- You will then make regular and predetermined contributions to the trust on behalf of, and for the benefit of your employees contingent upon them achieving predetermined performance outcomes.
- As the profits increase, so too does the percentage share that employees can benefit from. If profits are not increased, then no further allocation of funds is made to the PPT. That means you all have a shared stake in the success of the business.
A Peak Performance Trust is a “win/win for exiting owners who want the best for the business and to achieve the best sale price for their asset, and for their employees” LJ Hooker franchise manager.
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