EPS Insight: Broad-Based Employee Share Plans in Australia

August 2017 / Link Market Services

Welcome to our review of broad-based employee share plans in Australia. Over the last year Link has seen increased interest in broad-based share plans with many companies requesting market trends and data.

This review builds on that research and brings new insight into the operation of the broad-based plan.

This report contains insights on plan trends, design, offers, post vesting activity and employee engagement, and covers all the tax exempt and salary sacrifice plans offered by Link clients in 2016.

Additionally, we talk to Telstra regarding its ‘TESP’ to gain a better understanding of how they successfully managed their offer to 35,000 employees.

Throughout this report we refer to Tax Exempt Plans and $5,000 Share Purchase Plans, being the most popular broad-based share plans in Australia:

Tax Exempt Plans: are those plans meeting the requirements of section 83A-35 of the Income Tax Assessment Act 1997 (Cth) (the Act), and can be divided into ‘opt in’ (where employees must explicitly accept an offer of shares) and ‘opt out’ (where employees are given shares and can choose not to accept them). Tax exempt plans can also be offered as a ‘gift’ (for nil consideration) or on a salary sacrifice basis

$5,000 share purchase plans: are plans that meet the requirements of 83A-105(4) of the Act. These plans are typically offered on an opt-in basis and employees are invited to purchase shares at full value using pre-tax funds.

Key takeaways

• 75% of our ASX200 companies have a tax exempt share plan
• 68% of employees are still in the plan at the 3 year restriction period
• 4% of participants sold their shares within 30 days of the release date

Download the full reportOpens in new window