As of October 1, unlisted companies may offer meaningful equity incentives to all employees. Employees at all levels will be able to obtain an unlimited number of shares with unlimited underlying value, as long as certain safeguards are met. The $5000 value cap has been removed and replaced with a monetary cap of $30,000 a year, or $150,000 over five years.
"The purpose of the reforms is not altruistic. A significant and growing body of research from international ESS powerhouses demonstrates that businesses with greater employee ownership elicit improvements in employee commitment, engagement and reported wellbeing."
Shaun goes onto explain how private equity is also beginning to twig to these advantages.
"Spearheaded by Peter Stavros, cohead of US Private Equity at global investment firm KKR in New York, an employee ownership movement is gaining momentum, backed by world-leading private equity funds and asset managers."
Back in Australia, Shaun says that while some rules still need to be tweaked and tax structuring of employee ownership is still too complex, the new regime will enable both listed and unlisted companies to dramatically scale their ambitions for employee ownership.
"Employee ownership should never come at the expense of wages or benefits. Nor is it about transferring business risk to the workforce. It’s about revitalising the compact between employers and the Australian workforce for the benefit of both sides, the economy and community."
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