Employee share ownership plans are a great way to attract, retain and motivate all employees
ESOPs (employee share ownership plans schemes) are an ideal way to align the interests of the employees with those of shareholders. You may have also seen them called ESPs (employee share plans), ESSs (employee share schemes) or GEEPs (general employee equity plans).
Because employees can benefit financially when the company performs well, ESOPs also help build the foundation for enhanced employee engagement, commitment and involvement. GRG’s ESOP advantages include:
- Tax-effective savings for participants,
- Wealth creation as an uncapped supplement to superannuation (with access available prior to retirement), and
- Improve a company’s financial position in two respects: the balance sheet (short term) and profit & loss (long term).
ESOPs can also be used as a NED Fee Sacrifice Plans to facilitate NED holdings, which is an emerging focus of scrutiny for governance groups.
GRG offers a comprehensive employee share ownership plan service
GRG has deep experience in developing ESOPs tailored to the specific circumstances and needs of individual ASX listed companies. Our comprehensive solutions cover the complete ESOP lifecycle of providing plan design options and recommendations, obtaining board and shareholder approval, arranging plan documentation, implementation and communication, liaison with stakeholders (including proxy advisors and the Australian Shareholders Association) and plan administration.
Employee share ownership plans that give your employees capital protection
The $1,000 tax exempt plan base level of ESOP remains inadequately low for most employees in terms of building significant ownership, participation and engagement. Hence, more flexible and tax-effective plans are needed.
In response, GRG recently developed a new-style ESOP based on salary sacrifice ensuring that amounts sacrificed by employees come with a capital protection mechanism even if the share price falls. This feature is specifically introduced to remove the main impediment to employee acquisition of shares: risk of loss. When combining it with regular affordable pre-tax savings via salary sacrifice, it makes this unique new style of ESOP the way to go for most ASX listed companies. Lastly, this protection is provided at nil cost to the company.
Employee share ownership plans with a difference
- GRG removed all major barriers to maximising employee ownership with no limits on amounts that can be sacrificed
- Our instruments are effectively as flexible as cash, because:
- They may be exercised at any time of the participant’s choosing, and
- No tax has to be paid by participants until exercise or sale.
- The instruments are designed to eliminate investment risk in that our default design includes a 100% capital protection guarantee of amounts sacrificed if the share price has fallen at the time of exercise.
- No private tax rulings are required, as our plans are not based on loopholes or principles that are likely to come under scrutiny from the ATO – we only use commonly accepted approaches.
Our ESOP services
Use us as your trusted advisor to understand, choose and implement an ESOP that will benefit both the company and its employees.
- Context and information on:
- ESOP plan design alternatives
- Employee share scheme taxing provisions
- Employee share trust (EST)
- Corporations Act and other regulatory concerns
- Recommendations for your specific circumstance
- Drafting of plan documentation
- Arranging of plan administration
- Obtaining board and shareholder approval
- Liaison with stakeholders including proxy advisors and the Australian Shareholders Association
- Plan implementation and communication
- Plan support and workshops