-Employee Share Plans

Tuesday, 19 – 1 – 2016

Table 10.1 shows that listed companies have raised significant funds through employee share plans, although the primary purpose of such plans is to motivate senior managers and other employees by giving them an ownership interest in their employer. There are several type of employee share plan that have been used in Australia including:

(a) Fully – paid share plans, Employees are able to purchase new or existing shares, usually at a discount from market value

(b) Partly – paid share plans, The share issed to employees are initially partly paid and converted to fully – paid shares by a series of calls. In this case employees can be liable for calls if the company fails before the shares are fully paid

(c) Options Plans, Under these plans employees initially purchase an option to buy shares at some future time at a specified price.

(d) Employee share Trust, Employees have an interest in a trust which holds shares in the employer company. The trust is normally funded by the employer and employees who hold units in the trust can dispose of the units only to other member of the trust.

(e) Replicator plans, Replicator Plans do not involve actual shares in the employer company

The Popularity of the various plans varies among different types of employers

Graham Peirson

Rob Brown

Steve Waston

Peter Howard

MC.Graw Hill Irwin

Business Finance. 2002


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