Employee stock ownership, or employee share ownership, is where a company's employees own shares in that company (or in the parent company of a group of companies). US employees typically acquire shares through a share option plan. In the UK, Employee Share Purchase Plans are common, wherein deductions are made from an employee's salary to purchase shares over time.[1] In Australia it is common to have all employee plans that provide employees with $1,000 worth of shares on a tax free basis.[2][better source needed] Such plans may be selective or all-employee plans. Selective plans are typically only made available to senior executives. All-employee plans offer participation to all employees (subject to certain qualifying conditions such as a minimum length of service).
Most corporations use stock ownership plans as a form of an employee benefit.[3] Plans in public companies generally limit the total number or the percentage of the company's stock that may be acquired by employees under a plan.[4] Compared with worker cooperatives or co-determination, employee share ownership may not confer any meaningful control or influence by employees in governing and managing the corporation.
In the United States, private companies often use employee share ownership to maintain the political feasibility of the founding business plan and culture after the founders have left. Generally, the most senior employees own a majority stake and represent the leading voice in the company that employs them. They may be required to sell back the shares upon leaving the company.
A number of countries have introduced tax advantaged share or share option plans to encourage employee share ownership.
- ^ "Employee Stock Purchase Plan (ESPP)". Practical Law. Retrieved 2023-12-23.
- ^ Australian Tax Office|https://www.ato.gov.au/general/employee-share-schemes/employers/types-of-ess/concessional-ess/taxed-upfront-scheme---$1,000-reduction/
- ^ "Attitudes to employee share ownership - See it from their perspective" (PDF). ProShare. 2018. Retrieved 13 November 2019.
- ^ See, for example, in the UK, The Investment Association Principles of Remuneration (1 November 2019) Rule 2 xi (Dilution)