by Employee Share Ownership on January 21, 2012

December, 2011

Employee Ownership Australia Event in January – The Story of the John Lewis Partnership

An evening with Peter Cox talking about ‘the best company to work for in Britain’ – the John Lewis Partnership.
Event details – Tuesday, 24th January, 2012 at 5:30 pm
Level 42, 101 Collins Street, Melbourne, Victoria
Booking details can be seen in the attached EOA Brochure.

Peter Cox is a retired employee of the retail group the John Lewis Partnership, the largest employee owned company in the UK (which consists of the John Lewis department store group and the Waitrose supermarket chain). Peter has just published a book on the company with the title “Spedan’s Partnership – the Story of John Lewis and Waitrose”. (See www.spedanspartnership.co.uk for more details on the book and www.johnlewispartnership.co.uk for the Partnership’s history).

Peter will give an overview of the John Lewis story and its success as a business now employing over 75,000 people (the “Partners” in the business) and he will provide some insights into its model for employee ownership.

This is a free event sponsored by Employee Ownership Australia Ltd, the Cooperative Federation of Victoria and the legal firm Greenwoods and Freehills. It is also an official event on the program for the UN declared “International Year of Cooperatives” in 2012 (see www.australia2012.coop).

For more on the John Lewis Partnership, see the US National Centre for Employee Ownership article, December, 2011 here…

November, 2011


The Annual General Meeting of the Australian Employee Association Inc.will be held on 8th December, 2011 at 5:00pm

Location: Link Market Services Boardroom, Level 14, 680 George Street (entry via Level 12), Sydney NSW 2000.

The AGM – as per the agreed AEOA “Strategic Review Plan” – will be primarily focussed on the new organisation that has been created – Employee Ownership Australia Limited.

With this organisation now coming into place, the “association” structure will become redundant. Accordingly, there is a “Special Resolution” – as detailed in the notice of meeting to members  – to be put to the AGM recommending voluntary winding up of  the association (which – if passed – will proceed to be put in place by  31st December, 2011).

The AEOA has been working to set up a larger national body (incorporated under companies law) for some time –  a more sustainable, commercially oriented business model that can generate income from a range of membership services and activities, including conferences and events, member forums, training and educational seminars and webinars, research and publications, web advertising and sponsorships and membership subscriptions – while still maintaining its leading advocacy role in the development of broad based employee ownership .

Reporting to the AGM therefore will be the Chair of Employee Ownership Australia Ltd – Angela Perry. Angela will report on the progress that has been made as a result of the strategic review of the AEOA and the implementation of the plan arising from the review.

I am also pleased to announce that – to formally launch Employee Ownership Australia Ltd in May next year –  we have been able to secure as keynote speaker for the “National Conference”, Sir Stuart Hampson, immediate past Chair of “The John Lewis Partnership”, the “best company to work for in Britain”, the largest employee owned company in the UK and the business model which is now being promoted by the UK Government as the one which other enterprises should follow in future.

If you want to receive more information about Employee Ownership Australia, please send  an email to secretary@aeoa.org.au .

Alan Greig
Australian Employee Ownership Association Inc.

October, 2011


Locally grown and owned engineering plant C-Mac Industries in Girraween, in Western Sydney, has bucked the growing national SME trend to wind up on owner retirement (The Exit Generation Needs Help, SMH 19 Sept, 2011) with the introduction of an employee ownership share plan (ESOP) offered to all its employees. The engagement of employees as owners has already seen an 18 % hike in productivity at the plant.

The business succession problem is particularly acute and current in Western Sydney, where the bulk of NSW’s 50-65 year old business owners established themselves.

Auburn City Council recently commissioned a Local Business Research survey which found that although nearly 20% of SME owners were considering retiring or selling up at some time in the coming 2-5 years, very few had concrete plans for how they were going to make that happen. Fewer still were aware of all the options available to them, most believing that sale to a third party or handover to a son or daughter were the only alternatives.

The Australian Employee Buyout Centre facilitated the ESOP implementation and funded all the advisors costs for C-Mac Industries. The funding was provided through the Federal Government’s now defunct “Jobs Fund”.

At C-Mac Industries the ESOP was very well received by the employees with all but two of the 30 employees now participating in the company and earning equity and involvement in the business as well as an income.

At an Auburn City Council/AEBC Seminar held as part of Small Business September, Steve Grlyak manufacturing manager for C-Mac said in his “Presentation” that since the introduction of the employee share plan, “People are now saying “us” instead of “me” and asking, “what do you want is to do?”.

Job security is a key motivator at C-Mac and we do not want to lose employees with skills. There are now charts in the lunch room so everyone can see how the business is doing. The change has been truly unbelievable from all staff. I have directions and targets from the elected board (the plan involved the members electing two employees to represent them on the C-Mac board) and I have all the support I need from all staff. Our meetings are open for discussion with great ideas from all staff to improve efficiency. As a manager with job security and a share in the business it’s a great pleasure to manage a team who want you to lead with ideas”.

The company’s founding family are the principal shareholders but see the benefits of a gradual sale of shares to employees based on profit share as well as the increased involvement of key staff within the management team.

For a good article on the C-mac Industries project, see ESO succession Down Under from the January, 2012 emagazine of the UK ESOP Centre.


September, 2011

The strategic business exit: ASSOB engages ESOPs

For Baby Boomers wanting to exit from their long-held family businesses, it may not always be the best strategy, nor may it be possible, to offer the business for outright sale to just one single buyer.

The Australian Small Scale Offerings Board (ASSOB), provides a viable alternative for baby boomers to exit, or retire from, their business.

Once listed on ASSOB, business owners wanting to sell or transition into retirement can “engineer” their strategic exit. As well as outside investors, other potential buyers may be made up of management or employees, clients or suppliers (seeking to firm up their relationship) and even business migrants.

ASSOB is Australia’s largest capital raising platform for high-growth, unlisted companies (over $140M raised to date). ASSOB uses many of the techniques used by stock exchange listed companies to enable unlisted companies to raise between $500K and $5M in equity capital via the ASSOB Primary Board. It is a pioneer in this space in Australia and is rapidly becoming known as one of the most innovative capital-raising platforms in the world.

ASSOB delivers its services via Accredited ASSOB Sponsors. These ASSOB Sponsors are usually professional advisors and business consultants that work with growing companies and facilitate their listing onto the ASSOB Platform. ASSOB has also launched the ASSOB Secondary Sales System as well as the ASSOB Compliance Listing service which are the first of its kind in the unlisted securities sector in Australia. For more information please visit the ASSOB website, www.assob.com.au

It has been said for many years that, “one of the least valuable things to own in Australia is a minority interest in a private Pty Ltd Company”. For the first time ASSOB provides a platform for shareholders in SME’s to sell their shares on a fair and equitable basis.

ASSOB is well positioned to encourage the popularity of employee share ownership in Australia because:
• ASSOB only accepts unlisted public companies (no need for shareholder agreements – all “ordinary shares” 1 share 1 vote – fair and democratic.)
• A public company must appoint an auditor within one month of becoming a public company (provides greater transparency to its shareholders)
• ASSOB operates a “Secondary Sales” platform (maintains share registers, issues share certificates & generally monitors the 20/12 rule on behalf of its users – the issuers and sellers of securities)

ASSOB is politically attractive as it promotes regional development, job creation and employee share ownership without straining the public purse.

ASSOB delivers an ideal environment to allow ESOP’s to flourish in Australia.

For more information, please see the presentation “Business Succession Planning and Employee Share Ownership Participation”

Article provided by Tony Puls, Founding Director & Chairman, Australian Small Scale Offerings Board Limited (contact: tp@assob.com.au or phone 1300 722 954).

August, 2011

Light at the end of the tunnel on tax file number disclosure requirements

Since the new Employee Share Scheme (ESS) tax reporting legislation was introduced in 2009, there has been ongoing debate around tax file number disclosure requirements to third party registry providers and administrators specifically, whether this type of disclosure required the consent of employees. 

The ATO has now clarified the approach and confirmed that disclosure to 3rd party providers is acceptable. 

The attached “EPS Newsletter” covers the changes in detail and provides a link to the ATO text.

For more information on the reduced reporting requirements for employee share schemes, see the ATO’s new web-page “2010-2011 supplementary reporting requirements for employee share schemes – reduced ESS statements”.

Why Do Employees Participate in ESOPs: Research Report

Despite considerable public policy interest in the area,  non-executive employee share ownership in Australia has, until recently, been largely unchartered. Indeed, in 2000, the House of Representatives Standing Committee on Employment, Education and Workplace Relations’ Inquiry into employee share ownership found that, putting executive remuneration schemes to one side, ‘very little of a substantive nature is known about employee share plans in Australia at all.’

Largely in response to this finding, the Employee Share Ownership Research Project was established as a joint initiative of the Centre for Corporate Law and Securities Regulation, the Centre for Employment and Labour Relations Law and the Tax Group at the Melbourne Law School to evaluate the regulatory regime for employee share ownership plans (‘ESOPs’) in Australia.

As part of this Project, significant empirical research has been undertaken into the current incidence and forms of broad-based ESOPs in Australia, and the motivations and objectives of employers in implementing them. However, to date, the reasons why non-executive Australian employees elect or decline to participate in ESOPs remain relatively unclear. Where shares or options are provided to employees as a ‘gift’, the answer may be considered comparatively straightforward but, in cases of contributory plans, do employees only participate when they perceive the company to be a good financial investment or do non-financial considerations such as the desire to take part in company decision-making also play a role? Are employees’ decisions influenced by their degree of commitment to their employer or are attitudes towards employee share ownership in general more important? What, moreover, is the significance of demographic factors such as age, gender and income?

The answers to these questions have significant implications for corporate governance, human resource practice and public policy. A greater understanding of why employees participate in ESOPs will, for example, shed light on how employee participation in ESOPs may be increased.

To this end, the report “Why Do Employees Participate in ESOPs: Research Report” (June, 2011) presents findings from a survey of employees at two major Australia companies with operating ESOPs.

July, 2011

UK Government moves to simplify the taxation of employee share schemes

The UK Treasury has announced a major probe into the complexity of the current taxation of employee share schemes. The wide-ranging review will be carried out by the Office of Tax Simplification (OTS), with the objective of making share schemes more attractive.

The creation of a rational common tax framework for employee share schemes will enable the government and community partners to breathe new life into such schemes.

An opportunity for re-branding and a fresh launch for employee ownership will be created within the framework of the new, simplified tax regime, while preserving the overall tax reliefs currently enjoyed. Companies considering an employee share scheme will find it easier to compare and contrast choices. The rationale and structure of each plan would remain, together with the applicable tax benefits to encourage companies of all sizes to adopt and implement employee share schemes.

This is a project that should be of great interest to The Treasury in Australia, given that “cost and complexity” of the tax regime is cited as one of the major barriers to take up of such schemes in Australia – especially in SMEs.

See the OTS (UK) press release “Share schemes next area for simplification”.

See also the “Terms of Reference – Employee Share Schemes Tax Simplification”.

June, 2011.

Impact of the May 2009 Federal Budget on Employee Share Scheme (ESS) benefits: A perspective.

By: Ian S Crichton, Principal, CRA Plan Managers Pty Limited

It is now over two years since Treasurer Swan announced changes to the taxation of Employee Share Scheme (ESS) benefits in the May 2009 Federal Budget. After much upheaval in the months following the announcement changes to legislation were finally gazetted in December 2009, effective from 1 July 2009.

Given two years have passed since these changes were made we can now pause to look at what the initial affect of these changes has been.  The results appear to be decidedly mixed.

A brief analysis of some of the key impacts of the changes is set out in following sections.

• All ESS benefits provided by companies to Australian resident employees are now reported to the ATO.

• The participation rate of general employee share ownership has fallen.
• The nature and mix of senior executive remuneration has changed.

• Australia now taxes ESS benefits that are derived notionally.  That is, based on a “market value” at the time when “real risk or forfeiture” ends and not on the monetary value earned.
• Australia is now at a significant comparative disadvantage in the entrepreneurial sector due to the ESS changes.

The changes have made ESS benefits more costly to provide, have restricted design flexibility making them less effective and have created the potential for tax traps to arise for non-specialist users.

This has meant that ESS participation rates have fallen across the board and that smaller listed and all unlisted companies have been relatively disadvantaged by the changes.

For the complete analysis of the situation, read the full article “Impact of the May, 2009 Federal Budget on Employee Share Schemes”

For more on the issue, see the discussion forum “Regulatory Reform”

Lessons from Successful Employee Ownership Companies

The National Centre for Employee Ownership (NCEO – www.nceo.org ) in the US offers a checklist of eight “Lessons from Successful Employee Ownership Companies” which are worth considering. These are as follows:

1. The personal commitment of the person at the top of the organisation is essential. Strong leadership is necessary to encourage employee participation and to overcome the natural resistance people have towards change. Commitment from the top is necessary to overcome paternalistic structures and dependency and cynicism from the workforce.

2. A set of written values embodying your commitment to employee ownership is an important starting point. This ‘value statement’ must be more that just a set of platitudes or a public relations exercise. It must be a statement of the basic principles that should be a guide to everyone’s actions. This includes guidelines for corporate ethics.

3. Symbols of how everyone is treated as an owner are important. These must be more than just empty gestures. Some firms eliminate status perquisites such as executive lunchrooms, parking privileges, or different dress codes for managers. This is to maintain an atmosphere in which people can believe they are co-owners and their ideas valued. Even advertising and letterheads can reflect the employee ownership of the firm.

4. The people who have the most expertise in an area should be the ones making decisions about it; this is the most important point. If this employee-driven communication becomes institutionalised in the culture of the company, there should be freedom for sharing information across the board. It takes the pressure off the manager to be the fount of all knowledge, and gives an opportunity to the worker who ordinarily would not want to air a different opinion to that of their manager.

5. If the employees are to participate in decision-making, they need training to develop the necessary skills. This is important because people need to be taught to be participative. In some companies, new employees are assigned a mentor or guide for the first month or year, to familiarise them with the company’s culture.

6. Information should flow freely from the top down and the bottom up – not just from employers, about what a good deal the employees are getting, but also employees in regards to workplace innovations and so on. Open door policies or more formal approaches, where employees are represented in decision-making committees and/or groups, are both effective in maintaining this ‘information flow’.

7. Participative decisions take more time to make but less time and effort to implement than non-participatory decisions. It takes time to reach consensus, but once everyone is agreed, then implementing the decision is fairly smooth. If a decision is simply handed down from above, its implementation may be delayed by employee resistance.

8. No pat formulas exist for implementing the ‘ownership theory’. What works in one company may not work for another, or even the same company at a different stage of its development.

May, 2011

How employee share plans can be successful productivity and engagement tools

AEOA Member Link Market Services Ltd has provided two case studies of companies that have a long history of employee share ownership that is broad in nature and well supported by employees.  The case studies show how employee share ownership can transform a company’s culture and employee engagement. The workforce in each of the companies is largely made up of blue collar workers.

Case Study 1 – Listed Company, 1,000 employees
Company 1 has been operating an employee share scheme for all its employees for over 9 years.  When the plan was first initiated the core drivers were breadth of ownership, share retention over a long period, a means for all employees to accumulate wealth, a means to allow some employee engagement through share ownership and allow employees to share in the company’s success. The plan operates so that when the employee contributes a certain amount of money to acquire shares employees are rewarded by additional shares.  The longer the shares are held the more additional shares are accumulated.  Over time the participation has increased to around 70% of the employee population which is above market average for salary sacrifice plans (currently the market norm is 10 – 40%).

Case Study 2 – Listed Company 10,000 employees
Company 2 has been operating an employee share scheme for all its employees for over 5 years.  When the plan was first initiated the desire of management was to create a vehicle where employees could accumulate a low risk amount of shares to accumulate some wealth, share in the success of the company and reward past performance where the company performed overall.  The plan operates under the tax exempt $1,000 structure and there is some level of free element regardless of whether the employee contributes, there is an option to contribute some remuneration.  The level of participation has increased significantly over the last 3 years due to targeted communications and engagement of employees.  The participation has risen from 65% to 98%.

For the details of the results shown from the case studies, see the full paper “How employee share plans can be successful productivity and engagement tools”.

For the key considerations that a company needs to consider when implementing a new employee share plan of the type detailed in the case studies above, please see “Key Considerations in Implementing a Plan” .

For more information on implementing such employee share plans, go to “Employee Equity Plan Solutions” .

For more on the relationship between employee ownership, employee engagement and increasing productivity, see the ESOP Characteristics discussion forum.

Promoting employee ownership to improve employee satisfaction and company productivity.

A new research paper “The benefits of promoting employee ownership incentives to improve employee satisfaction, company productivity and profitability” by E. John McElvaney (International Review of Business Research Papers, Vol. 7, No.1, January, 2011, pages 201 – 210) examines employee share ownership plans (ESOPs) in Australian businesses by reviewing overseas and local business experiences and considers the viewpoints of both Australian employers and employees.

The investigation examines data from 11 founding members of the Employee Ownership Group. It looks at the performance of these companies and the benefits of the $1,000 per annum tax free share allocation compared with other forms of investment such as investing in the all ordinaries of the Australian Stock Exchange (ASX) or paying off mortgage payments ahead of time.

The research highlights that Australian companies which introduced broad based ESOP schemes did add economic value to their shareholders and that employees involved in the ESOP schemes got better value than the other investments that were tested.

The Meaning of Ownership for Employees – Developing an Ownership Culture

Loren Rodgers (2001) using his Ownership Culture Survey™ (OCS) –  a survey-based approach to measuring the psychology of ownership based on work with USA employee ownership companies over 15 years  – has shown that there are five major meanings of ownership for most employees. These are:

Financial Payoff: ownership as a financial benefit – as owners, people expect at some point to receive cash value
Participation: owners being included in the decisions that affect their day-to-day work; wanting to have a say over the issues that affect their working conditions
Influence: having a part in broader, company-wide decisions. Owners want a degree of influence over strategic issues
Community: a bond with their fellow owners; they want to feel that the whole company is “in this together”
Fairness: being treated fairly by the company; owners want sensible rules and they do not want “special treatment” for specific individuals.

For more on the “Ownership Culture Survey”, see: http://www.ownershipassociates.com/ocs.shtm and http://www.nceo.org/main/page.php/id/7/

April, 2011

Strategic Review for the AEOA

The AEOA has operated under the same objectives, structure and constitution since it was formed in 1986.

It is time therefore to reconsider the AEOA’s role, functions, structure and constitution, membership, sources of income, services etc – all with an eye to the future and the emerging “new markets” for employee ownership.  There is a clear need to upgrade the AEOA role in advocacy and education services provision to meet the challenges of the employee ownership agenda in the 21st century in the face of significant institutional barriers.

The goals and purpose of the “AEOA Strategic Review” will be to:

1. Develop a new strategic vision and business model for the AEOA to be sustainable over the next decade.
2. Assess where we are at now, who we are and where we want to be in the longer term (including our strengths and weaknesses and the opportunities and threats we face) and translate this into a new strategic plan, with achievable targets.
3. Develop a new “value proposition” for the AEOA which will attract and retain members and significantly increase the resources available to the AEOA.
4. Design for speedy implementation a new legal structure and constitution for the AEOA based on the “National Body” principle.
5. Recommend on a new marketing and PR strategy for employee ownership in Australia.
6. Consider and report on the “upgrading” requirements of the AEOA’s current web-site.

The full “AEOA Strategic Review” document can be seen on the “Strategic Plan” page in the “Members” section of this web-site – access above (top right hand corner of this page).

The Review will commence after Easter and will include a survey and communications program for AEOA members. Early comments are welcome.

Alan Greig

Policies needed – Can ESOPs be used to finance small business?

The  recent Senate Inquiry into “Access of Small Business to Finance” is just the latest saga in a long and largely unrewarding search by Canberra politicians to find a way of financing capital starved small and medium sized enterprises (SME’s).

The biggest hurdle faced by the Canberra searchers is that they seem to be unable to think alternatively. They are stumped by the problem of how to divert to SMEs even a trickle of the vast sums now pouring into superannuation. They have never considered that ownership might be central to company financing.

How does one turn ownership into a financing tool? The answer is easy – it is the leveraged ESOP. (See how the leveraged ESOP works here).

How ESOPs can be used to finance business
Leveraged ESOPs – where a third party finances the purchase by an ESOP trust of new shares in the employer company – provide a means through which Superannuation Funds (among others) can invest in unlisted businesses without exposure to the risks inherent in holding company equity. By financing an ESOP, the Funds can open up a new field of investment without having to worry about loss of liquidity or how to exit unlisted ordinary shares.

Moreover, by linking Superannuation Funds with employee ownership in this way, the Government would be able to ensure that the Funds invest in innovative, small and medium-sized companies without having to exert political pressure to direct investments toward government-preferred targets. This simply dissolves the problem which bedevils the Government’s search for SME financing.

Investing through an ESOP provides forms of security for risk-averse Superannuation Funds not offered by other investments.

First, loans made to an ESOP can he repaid more quickly than ordinary loans. This is because the company can obtain tax deductions for its contributions to an ESOP. The pace of repayment can be further accelerated because the ESOP can tap into funds from diverse sources: company subscriptions, profit shares, dividends and employee contributions.

Secondly, ESOP companies offer a lower level of business risk because companies whose employees have a stake in the firm have a statistically proven propensity to outperform their rivals. Super Fund managers can take advantage of crucial investment advice provided independently of management by the elected employee trustees of the ESOP trust. Indeed, even where Super Funds invest in listed companies, they can enhance returns both by purchasing company shares and by financing employee ownership. The latter can provide security for the former.

But will Super Funds and other investors really be attracted to financing employee owners? The fact is the investment institutions are already looking for ways to access the unlisted company market for funds. Investment in management buyouts (MBOs) is just one way in which they already obtain access to this market. And the people who manage these funds for institutions – usually buyout experts – are already looking for ways to enable employees to participate in these MBOs. These experts realise that employee participation in the MBO provides greater security for their investors. The problem for the investors is that there is just not enough buyouts being done.

Now ESOPs generally operate just like an MBO in slow motion. The spread of employee ownership in unlisted companies therefore has the potential to open up this market for Super Fund investment on a grand scale. The greater the number of SMEs in which employees have a slice the action, the greater the number of high security investments there are for Super Funds and other financiers.

When will the penny drop in Canberra?

(For more on ESOPs in private and unlisted compnaies, see our our “Private Company ESOPs” page).

March, 2011

Employee owned companies focus on the quality and sustainability of their business.

With much attention now being given to the economic, financial and social problems arising from the corporate culture of “short-termism” (for example, see the March, 2011, Harvard Business Review article “Capitalism for the Long Term”), many employee ownership companies can now be seen at the forefront of those opting for sustainable growth, not simply “growth for growth’s sake”.

In his opinion piece “Grow or Die? Maybe Not” for “The Employee Ownership Report” (January – February, 2011), Corey Rosen, Executive Officer of the US National Centre for Employee Ownership points out that there are few more potentially destructive business notions than that companies need to keep growing or they will die.

Companies looking to sustainable growth in future will be doing so through concentrating on the provision of goods and services and not through acquisition or the manipulation of money or the value of assets. Many employee ownership companies will simply choose to limit how big they get and focus instead on the quality and sustainability of their business.

“For employee owned companies, all the arguments ring true. After all, one of the great advantages of employee ownership is the luxury of being able to focus on the long term”.

See “Grow or Die? Maybe Not” for the full article.

UN International Year of Co-operatives, 2012

Did you know that the United Nations has declared 2012 the International Year of Co-operatives?

The Australian Steering Committee formed to coordinate a nation-wide response to the Year, has produced an information pack with details about how all forms of social business can get involved.

A PDF copy of the “National Call to Action” Pack can be downloaded at www.socialbusiness.coop/resources/NCTA-Briefing-Pack-unlocked.pdf

You can register for updates by emailing your name and organisation to iyc@socialbusiness.coop

More information on the International Year of Co-operatives can be found on the Social Business Australia website.

“Co-operative enterprises build a better world” is the official theme of International Year of Co-operatives 2012.

The AEOA is an active participant in the IYC Steering Committee, representing worker cooperatives everywhere.

February, 2011

Regulatory Reform – Progressing towards a seamless national economy.

The AEOA is a sponsor of the Conference in Melbourne on 12th and 13th April, 2011 on “Regulatory Reform – Delivering Increased Productivity for a Seamless National Economy”.

By 1 July 2013, all jurisdictions in Australia must deliver regulatory reform in line with the key milestones that have been established in the COAG National Partnership Agreement to reduce the level of unnecessary and poorly designed red tape in Australia. These milestones are paving the way towards delivering increased productivity and a stronger economy.

To ensure the regulatory process is effective and the interface between government and the business community is seamless, many challenges regarding regulatory design, assessment and enforcement must be addressed.

The Conference will examine the progress of the regulatory reform agenda and outline the key reform strategies being pursued to improve productivity and economic growth.

The AEOA sees that employee ownership could have a useful role to play in this agenda – though not without major regulatory reforms in the area of employee share ownership law.

The following key challenges will be addressed at the Conference:
• Regulatory harmonisation
• Regulatory design and assessment processes
• Role of the regulators
• Strengthening relationships between regulators and key stakeholders.

Conference delegates will participate in discussions on:
• The latest updates on federal and state progress in delivering the regulatory reform agenda
• Opportunities and challenges of regulatory harmonisation across jurisdictions
• Preparation and benefits of regulatory impact statements
• The role of the regulator and stakeholder engagement during all stages of the regulatory process

The Conference web-site can be accessed at http://www.regulationreform.com/index.php.

For more on the issue of regulatory reform in the area of employee share ownership, see the AEOA “Discussion Forum” on this topic.

January, 2011

Media Release 4 January 2011

The AEOA “ESOP of the Year Award” 2011

The Australian Employee Ownership Association (“AEOA”), Australia’s only non-profit association supporting and promoting the development of Employee Share Ownership Plans (“ESOPs”) throughout Australia, has great pleasure in announcing the “ESOP of the Year Awards” for the year 2011.

The awards in two categories recognise the achievements of companies who have successfully introduced what is termed “broad-based employee share ownership plans” in Australia. The winners are:

  • BP Australia Pty Ltd – Best Employee Share Ownership Plan in a company with more than 200 employees.
  • LJH Commercial-Central Coast – Best Employee Share Ownership Plan in a company with less than 200 employees.

The awards were determined by an independent judging panel comprising:

  • Mr Bill Patullo, consultant, former Human Relations Manager, BHP Ltd; and
  • Mr Mike Sewell, Managing Director of Market Group Investments Pty Ltd, a company investing in SME’s.

The judging criteria was based on plans which:
(a)    were broadly based, that is, open to the majority (if not all) employees of the organisation;
(b)   had involved effective communication procedures (for example, handbooks, presentations, online communication); and
(c)    encouraged participation of employees as owners, and maximised take-up rates for the plan.

BP is committed to employee share ownership with share plans in more than 60 countries and in Australia the BP Employee Share Plan has been in place since 1990. It is a matching plan where the company offers one free share for each share an employee purchases or otherwise commits to the plan up to a maximum value determined each year. In 2010, the maximum value was $3,400. In the 2010 employee share plan offer, 76.4% of the 1800 BP employees in Australia took up the offer.  In addition to receiving the free shares, participants are entitled to dividends and voting rights on the shares and other benefits offered to BP shareholders including dividend re-investment. The offer is generally made each year and many employees have accumulated material shareholdings in the company over multiple offers which reinforces the objective of creating alignment between employees and shareholders.

LJH Commercial – Central Coast is a small commercial real estate agency of eight staff. It’s ESOP is a “Peak Performance Trust” which is used both as a Staff Retention Plan and a Succession Plan for two major shareholders approaching retirement age. Six of the staff are in the Trust at present (a take-up rate of 75%). Participation is by invitation. Objectives of the ESOP are being achieved as no Trust members have left the company. The succession objective is longer term in nature as the Trust increases it’s shareholding in the company. The ESOP is currently providing strong motivation for all staff to improve and grow the business with the Trust members now thinking and working like “owners”.

Director, Ty Blanch concluded “We have created a more understanding team of people, and added value to the individual’s performance congruently.”

The AEOA announced the Awards at its Annual General Meeting in Sydney on 9 December 2010. The Awards recognise the best examples of ESOPs at a time when Australian companies are experiencing rapid growth in employee share ownership.

The AEOA congratulates the boards and staff of BP Australia and L.J.Hooker Commercial Central Coast as worthy winners of the 2011 ESOP of the Year Awards.

Alan Greig
President, AEOA

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