Broad-Based Employee Share Ownership in Australian Listed Companies: Survey Report

93 Pages Posted: 8 Apr 2009 Last revised: 24 Jun 2009

See all articles by Ingrid Landau

Ingrid Landau

Monash University; Monash University

Richard Mitchell

Monash University - Department of Business Law & Taxation

Ann O'Connell

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Shelley D. Marshall

RMIT University

Date Written: April 8, 2009

Abstract

This research report presents findings from a survey of employee share ownership practice in Australian listed companies. The research focused on broad-based employee share ownership plans (ESOPs): that is, plans that are open to a majority of employees within the company. The purpose of this study was fourfold: (1) to inform public policy debate on the issue of employee share ownership through providing, for the first time, a detailed account of employee share plan practice in Australian listed companies; (2) to examine how, if at all, the regulatory framework in taxation and corporate law is impacting upon the decision by companies to implement ESOPs and the design of their plans; (3) to obtain company views on the adequacy of the current regulatory framework; and (4) to test a range of hypotheses as to the determinants of ESOPs in the Australian context.

Key findings as to company practice include: (1) approximately 57 percent of companies responding to the survey had at least one broad-based employee share ownership plan; (2) significantly more companies reported having a broad-based plan than a narrow-based plan: that is, a plan that is only open to executives; (3) the three most popular reasons for implementing a plan were 'showing employees the company values them'; 'sharing financial success with employees'; and 'aligning employee interests with shareholder interests'; (4) over three quarters of companies that have a broad-based plan have adopted their plan since 2000; (5) the most common type of broad-based ESOP was a plan structured to take advantage of the tax exemption in Division 13A of the Income Tax Assessment Act.

Three structural characteristics were found to have a significant and positive association with the presence of an employee share ownership plan. These were the presence of a centralised human resource function; company growth over the preceding 12 months (measured by the number of employees); and the composition of the workforce (the proportion of full-time to part-time and casual employees). We also found that companies with broad-based ESOPs were significantly more likely to have structures for communicating directly with employees.

Suggested Citation

Landau, Ingrid and Landau, Ingrid and Mitchell, Richard James and O'Connell, Ann and Ramsay, Ian and Marshall, Shelley D., Broad-Based Employee Share Ownership in Australian Listed Companies: Survey Report (April 8, 2009). U of Melbourne Legal Studies Research Paper No. 412, Available at SSRN: https://ssrn.com/abstract=1374702 or http://dx.doi.org/10.2139/ssrn.1374702

Ingrid Landau

Monash University ( email )

Caulfield Campus
900 Dandenong Road Caulfield East
Melbourne, Australia, Victoria 3145
Australia

Monash University

Wellington Road
Victoria, Roodepoort 3145
Australia

Richard James Mitchell

Monash University - Department of Business Law & Taxation ( email )

Caulfield Campus
Sir John Monash Drive
Caulfield East, Victoria 3084
Australia

Ann O'Connell

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Shelley D. Marshall

RMIT University ( email )

Melbourne Campus
Building 13
Melbourne, Victoria 3000
Australia
+613 99251382 (Phone)

HOME PAGE: http://www.rmit.edu.au

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