Best Practices for a Successful Employee Share Plan

Table of Contents 

1. Aligning employee share plans with company objectives
2. Ensuring employee understanding and engagement
3. Enhancing participant experience with intuitive technology
4. What to look for when choosing your employee share plan platform
5. Meeting legal, compliance, and regulatory obligations
6. Measuring success
7. Why choose Automic as your share plan provider platform?  

1. Aligning employee share plans with company objectives

Integrating employee share plans with your company’s broader goals is vital for achieving alignment between employees and organisational priorities. When share plans reflect the company’s mission and vision, they become a powerful tool to drive engagement and performance. 

By aligning employee contributions with organisational objectives, companies can foster a sense of shared purpose. Employees who see their role as directly contributing to the company’s success are more likely to feel valued and committed to their work. This sense of ownership not only increases engagement but also drives productivity, as employees are motivated to achieve outcomes that benefit both themselves and the business. 

Additionally, employee share plans can help instil long-term thinking. By tying rewards to the organisation’s sustained success, employees are encouraged to focus on initiatives and behaviours that support strategic priorities. This alignment strengthens organisational resilience and creates a cohesive culture where everyone works towards common goals. 

What does alignment look like in practice? 

• If your goal is to retain strategically important employees who will drive the company’s success, you might design a plan where their awards vest based solely on continued employment. For example, they could receive equity that vests proportionately over a period of years or upon a specific event, such as the sale of the business. If they remain with the company, they are rewarded; if they leave, they forfeit their awards. To make the plan truly effective, you would need to ensure the potential reward is significant enough to incentivise retention. 

• If your objective is to foster a broad-based culture of employee ownership across the entire organisation, you might opt for a more inclusive approach, such as gifting shares to all employees. In this case, there may be no vesting conditions, ensuring immediate participation. Typically, such plans provide an equal dollar value of shares per employee, reinforcing a collective sense of ownership and shared success. 

• Alternatively, you could tie award vesting to specific performance metrics such as revenue or profitability targets. This approach is particularly effective for executive teams, ensuring that leadership incentives are directly linked to business performance. For example, executives might receive equity awards that vest upon achieving certain financial milestones or strategic objectives, aligning their interests with the long-term success of the company. 

• For business owners, regularly reviewing and communicating the link between the share plan and broader objectives is essential. Doing so ensures the plan remains relevant and continues to reinforce the connection between individual contributions and collective success. 

2. Ensuring employee understanding and engagement

Clear communication is fundamental to the success of any share plan. Employees need to understand not only the purpose but also how the plan benefits them, and the specific mechanisms involved. Transparency and clarity build trust, which is essential for encouraging participation and engagement. 

To achieve this, businesses should take proactive steps to ensure all employees, regardless of their familiarity with financial concepts, can grasp the plan’s key details. This includes conducting informative workshops, providing easy-to-read materials, and hosting Q&A sessions where employees can raise questions. Regular updates about the plan’s progress and any changes can further reinforce trust and ensure everyone stays informed. 

It’s also important to identify the key stakeholders responsible for communicating these plans. Human resources (HR) teams, managers, and even senior leaders play a crucial role in championing the share plan’s benefits and addressing concerns. By ensuring a coordinated approach across these groups, businesses can create a culture where employees feel supported and motivated to participate. 

Financial literacy matters 
Not all employees have the same level of financial literacy, which can significantly affect their understanding and engagement with employee share plans. While some may readily grasp the concepts of shares, tax implications, and long-term investment strategies, others might feel overwhelmed or unsure about participating. Recognising and addressing this gap is crucial for ensuring the plan’s success. 

Providing tailored educational resources, such as step-by-step guides, videos, and personalised consultations, can help bridge this gap. Offering different formats and levels of detail ensures employees can engage with the information in ways that suit their comfort and knowledge levels. Ultimately, empowering employees with financial literacy not only benefits them personally but also strengthens their commitment to the organisation’s goals. 

3. Enhancing participant experience with intuitive technology

Technology can make or break the user experience. For employees, an intuitive and user-friendly platform fosters confidence and encourages active participation in the share plan. When employees can easily access information, track their benefits, and understand the processes involved, they are more likely to engage meaningfully with the plan. Features such as mobile compatibility, personalised dashboards, educational content and real-time updates can significantly enhance the overall experience. 

For internal administrators, technology offers invaluable efficiencies. An integrated platform can automate time-consuming tasks such as tracking offer acceptances, processing transactions, and ensuring compliance with regulatory requirements. This not only reduces administrative burdens but also minimises errors, providing a seamless experience for both employees and the organisation. Technology also enables robust data reporting, allowing administrators to gain insights into participation trends and identify areas for improvement. 

Moreover, the right technology can serve as a bridge between employees and administrators, offering tools like self-service portals and helpdesk support. These features empower employees to manage their share plan participation independently while still having access to assistance when needed. For business owners, investing in modern, intuitive technology ensures the share plan remains accessible, efficient, and aligned with organisational goals. For administrators, an integrated platform reduces the burden of repetitive tasks such as tracking vesting dates and participant notifications for plan activities. These tools ensure accuracy and efficiency while enabling dynamic reporting capabilities to monitor plan performance and participation rates. 

4. What to look for when choosing your employee share plan platform 

When selecting an employee share plan platform, it is essential to focus on features that enhance usability, compliance, and operational efficiency. These are some must-have features to look for: 

• Employee dashboard: An intuitive dashboard offers employees a comprehensive view of their equity awards and related information. It empowers them to make informed decisions and remain engaged with their equity journey. 

• In-built compliance reminders and alerts: Intuitive alerts ensure your HR, finance, legal, and company secretarial teams stay on top of important tasks and deadlines while maintaining compliance across all processes. 

• Automated vesting management: Enables administrators to toggle auto-vesting, set reminders for key stakeholders, and calculate pro-rated vesting outcomes. 

• End-to-end digital experience: Streamline operations by eliminating manual processes and securely distributing share plan invitations digitally. 

• Reporting suite: Look for reporting functionality that enables smarter, data-driven decisions with a system that offers on-demand and automated report generation, aiding compliance management and operational transparency. 

• Online exercise management for vested awards: Allow employees to manage vested awards seamlessly through tailored communication, easy exercise approvals, and direct feedback via a robust dashboard. 

• Online document library: Ensure employees have 24/7 access to their share plan documents in a secure and centralised repository. 

• Contribution share plan management: Simplify payroll deductions and share purchases while ensuring purchased shares are allocated promptly and efficiently. 

• Employee share scheme tax reporting: Save time and reduce errors with in-built compliance for ATO ESS tax reporting, including the preparation of statements and amendments for previous years. 

SaaS vs. outsourced plan management – Which is right for you? 

Beyond platform features, another key consideration is whether to select a fully self-service (SaaS) platform or an outsourced administration provider that offers dedicated share plan support alongside the technology. 

SaaS platforms are ideal for early-stage startups or companies where plan activity is relatively infrequent or the number of plan participants is small. They provide flexibility and control but still require an ongoing time investment from internal staff to manage plan administration. If you choose a SaaS solution, you’ll need to determine whether a team member has the capacity and expertise to handle the complexities of equity plan compliance, data management, and ongoing plan operations. 

Outsourced administration providers (such as Automic Group) offer a comprehensive solution that combines technology with specialist support. In addition to providing platform access, they manage the ongoing administration of your plans, help employees navigate the platform, draft plan communications, prepare tax lodgement data, distribute offer invitations, and ensure compliance with regulatory requirements. This model is beneficial for businesses looking to reduce the internal administrative burden while ensuring a seamless experience for both employees and stakeholders. 

For organisations looking to elevate their employee share plan experience, exploring platforms with these features - and deciding on the right level of administrative support - ensures greater engagement and seamless management. 

Learn more about how Automic’s ESP platform can meet these needs: Automic Employee Share Plans (ESP).

5. Meeting legal, compliance, and regulatory obligations

Managing an employee share plan effectively requires strict adherence to legal, compliance, and regulatory obligations. These obligations safeguard the integrity of the plan, protect the organisation from potential risks, and build trust with participants. However, compliance can be particularly complex for companies operating global share plans across multiple jurisdictions, where reporting requirements and legal frameworks vary significantly. 

For employees, strong compliance practices ensure that their equity awards are handled securely and in line with regulatory standards. This creates confidence in the plan and reduces apprehension about participation. Transparent communication of compliance measures also reinforces the organisation’s commitment to protecting employee interests, further enhancing engagement and trust. 

For administrators, managing compliance requires precision and timeliness. Advanced technology can significantly alleviate the burden by automating critical tasks such as tracking deadlines, generating reports, and managing region-specific requirements. For example, tax obligations under employee share plans vary widely across jurisdictions: 

• In the USA, employers typically have a withholding tax requirement, meaning tax must be deducted and remitted shortly after a taxable transaction under the plan occurs. 

• In Australia, employees are responsible for settling their ESP tax obligations through their end-of-financial-year tax return, rather than employers withholding tax at the point of vesting or exercise. 

• In the UK, tax treatment depends on the type of share plan in place (e.g., EMI, CSOP, or unapproved plans), with specific reporting obligations to HMRC. 

These differences mean that a one-size-fits-all approach to compliance is ineffective. A vesting event may need to be structured differently for employees in Australia compared to those in the US or UK. A robust share plan platform can help manage these complexities by alerting administrators to upcoming compliance deadlines, preparing documents for audits, and ensuring tax reporting aligns with local laws. 

Beyond technology, partnering with a share plan provider that combines global expertise with local regulatory knowledge can further streamline compliance. These providers stay ahead of legislative changes and adjust reporting processes, accordingly, ensuring businesses remain compliant across all jurisdictions. This proactive approach not only reduces administrative strain but also protects the organisation’s reputation and fosters employee confidence in the plan. 

6. Measuring success  

Success in employee share plans goes beyond just the numbers - it’s about ensuring the plan achieves its intended purpose, whether that’s retaining key talent, driving business performance, or fostering a culture of ownership. To measure success effectively, companies must establish clear and relevant metrics tailored to the type of plan being implemented. These metrics should not only provide meaningful insights for management but also ensure that the platform being used can track, capture, and report on them accurately. 

Measuring success in executive share plans 

For executive plans, success is typically measured by alignment with overarching business objectives, such as: 

• Revenue growth, profitability, and market share expansion, 

• Strategic goal achievement (e.g., hitting key operational milestones or business transformation objectives), or 

• Shareholder value creation (e.g., share price appreciation, return on equity). 

In many cases, executive share grants are tied directly to these performance outcomes. By linking vesting conditions to strategic goals, companies can ensure executives are incentivised to drive results that benefit both the business and its shareholders. 

Measuring success in share plans 

Measuring success in broad-based plans 

For broad-based plans, the focus shifts to engagement, retention, and cultural impact. Key metrics include: 

• Participation rates: How many eligible employees are opting into the plan? 

• Retention levels: Are employees staying with the company longer due to the share plan? 

• Engagement and perception: Do employees feel a stronger connection to the company because of their ownership stake? 

Beyond the numbers, qualitative feedback is critical. Conducting employee surveys or focus groups can provide valuable insights into how the plan is perceived and whether it is truly driving engagement. Employees’ understanding of their equity awards, the perceived value of the plan, and overall sentiment toward company ownership should all be assessed. 

Creating a holistic view of success 

A combination of quantitative and qualitative data provides the most accurate picture of whether an employee share plan is achieving its objectives. If participation rates are low or feedback suggests employees don’t fully understand the plan, adjustments may be needed—whether that’s improving communication, adjusting the plan’s structure, or refining the eligibility criteria. 

7. Why choose Automic as your share plan provider platform?  

Automic supports best-in-class share plan administration by delivering a platform that combines advanced technology, robust compliance capabilities, and a seamless user experience. By integrating these features into one cohesive solution, Automic delivers scalable, efficient, and compliant share plan administration that aligns with best practices and meets the unique needs of organisations. 

Here’s how Automic helps organisations effectively manage their employee share plans: 

• Advanced technology: Automic’s cloud-native platform automates critical processes, including compliance tracking, vesting management, and reporting. Real-time dashboards and intuitive interfaces empower administrators and employees to manage plans efficiently and confidently. 

• Integrated compliance solutions: With in-built compliance reminders and tax reporting capabilities, Automic ensures accurate data for audits and reviews while keeping companies aligned with regional regulations. 

• Comprehensive reporting suite: Dynamic reporting features allow for on-demand and automated report generation, enabling data-driven decisions and operational transparency. 

• Tailored employee experience: Personalised dashboards, self-service portals, and 24/7 access to key documents ensure employees stay informed and engaged throughout their equity journey. 

• Local expertise: Automic’s specialist knowledge of regional regulatory and legislative requirements provides peace of mind for businesses operating across multiple jurisdictions. 

• Dedicated support: An expert team offers proactive assistance to ensure a smooth experience for both administrators and employees, addressing challenges effectively and efficiently. 

• Secure and reliable governance: Hosted exclusively in Australia, Automic’s platform adheres to the highest standards of security and compliance, providing organisations with reliable and secure data access. 

About Automic 

Employee share plans are more than just financial incentives—they are a cornerstone of a progressive workplace strategy that promotes engagement, loyalty, and a sense of ownership among employees. While the journey to implementing and managing these plans can present challenges, the right tools and expertise make all the difference. 

Automic’s innovative ESP platform streamlines every step of the process, ensuring compliance, scalability, and employee satisfaction. By adopting best practices and partnering with Automic, organisations can maximise the impact of their employee share plans, creating a culture of shared success and long-term value. 

Ready to elevate your employee share plan strategy? Discover how Automic’s cutting-edge platform can transform your approach. Request your free demo today and let us help you unlock the full potential of your employee share plans, fostering success for your organisation and its employees alike.