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The Employee Ownership Update

Loren Rodgers

December 1, 2014

(Loren Rodgers)

Australian Securities Agency Updates Guidance for Employee Ownership Plans

The Australian Securities & Investments Commission (ASIC) issued new guidance designed "to better facilitate employee incentive schemes and to reduce the red tape associated with notifying ASIC." The update includes different relief measures for public and for closely held companies. ASIC Commissioner John Price said, "ASIC has been able to provide more relief for unlisted companies than has been given in the past. However, given there are fewer regulatory reporting and compliance obligations applying to unlisted bodies, and no readily available market price for their financial products, our class order relief is somewhat more restricted than for listed bodies."

The new guidance anticipates related work by the Australian Tax Office and follows an announcement by the government of Tony Abbott that it will work to promote employee ownership in Australia.

Equity Compensation Emerging in China

A bank, a port operator, an insurance company, and a dairy company are among the 20 firms that are issuing shares or options to their employees in China. Zheng Chunming, an analyst at Capital Securities in Shanghai, said that "We see [China] Minsheng [Bank] as a test for expanding the stock incentives to other banks." The movement began a year ago when the Chinese Communist Party include stock incentives as part of its roadmap of economic reforms. Some experts worry that, even in companies where the government holds a minority of shares, it may appoint managers and exert a degree of control over the business.

Stock Purchase Plans and 401(k) Loans

New research by Fidelity Investments finds that employees are less likely to borrow against their 401(k) plans when companies also offer an employee stock purchase plan, and when they do, they tend to borrow less. The effect is largest in companies with 500 or fewer employees: companies with a 401(k) plan alone had 23% of the work force with outstanding loans, versus 14% of employees at companies with both a 401(k) plan and a stock purchase plan. When they have the choice, employees tend to cash in their company stock instead of borrowing against their 401(k) plan.

Nominations for the NCEO Board of Directors Close Soon

The NCEO accept nominations and self-nominations for its board of directors until December 12. The board is actively engaged in supporting various NCEO projects, such as providing input on research projects, generating publications, creating outreach opportunities to help the NCEO reach new audiences, supporting state employee ownership centers, and much more. Those interested in learning more can refer to our resource page for board candidates or contact Loren Rodgers (LRodgers@nceo.org, 510-208-1307).

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