Why Do Employees Participate in Employee Share Ownership Plans?

Abstract

Employee share ownership in Australia has, until recently, been largely unchartered, despite considerable public policy interest in the area. Although empirical research has recently been undertaken into the current incidence and forms of broad-based employee share ownership plans (ESOPs) in Australia, and the motivations and objectives of employers in implementing them, the reasons why non-executive Australian employees elect or decline to participate in ESOPs remain 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 implications for corporate governance, human resource practice and public policy. This research report presents findings from a survey of employees at two major Australian companies with operating ESOPs. Part 2 of the report explains the background and methodology behind the survey. Parts 3 and 4 set out, respectively, the key characteristics of the sample and the basic results, while Part 5 directly tests the above questions.