Incidence of Employee Share Ownership is low in Australia – but why ?

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Incidence of Employee Share Ownership is low in Australia ( especially in SME’s ) – but why ?


Incidence of Employee Share Ownership is low in Australia ( especially in SME’s ) – but why ?

By , January 2, 2010

The incidence of ESO reported in a recent survey by TNS social research was quite low – with only one in ten businesses ( 10 % ) having a plan. Only 4 % of all businesses had a broad based plan which was open to at least 75 % of all employees.

The companies most likely to have an ESOP:

Public listed companies ( 52 % )
Companies with an overseas office ( 32 % )
Large Businesses :
100 or more employees ( 30 % )
More than 50 offices in Australia ( 39 % )
Annual turnover of more than $50M ( 32 % )

Those least likely were:

Private companies 9 8 % )
Companies with only one office ( 10 % )
Small Businesses – 5 – 19 employees ( 9 % )

Interestingly the same research strongly supported the effectiveness of existing plans with 51 % of businesses who have a plan ranking them as either extremely effective or effective and only 8 % ranking them as ineffective or not at all effective .

This is in line with our experience where clients who have already implemented a plan are seeing dramatic improvements in financial performance and employee satisfaction ( and more importantly retention of key staff ) . A key recommendation of the report was to raise awareness amongst the business community of the benefits of ESOP’s .

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.