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Moneyweb interview: How can Employee Share Ownership Plans (ESOPs) go beyond ticking the compliance box and become a true driver of economic growth? The key lies in aligning employees, managers, and shareholders to create meaningful, long-term value across industries. Bruce Hunt explores this topic with Jeremy Maggs on Moneyweb.
Published in Daily Maverick: Employee share ownership plans have been underused as a strategy to galvanise economic growth in South Africa. They can be a mechanism to drive inclusive economic growth while broadening the reach and impact of black-based economic empowerment programmes.
Published in the Daily Maverick: South Africa’s new Government of National Unity presents a significant opportunity to drive policy that encourages more employee share ownership. Employee share ownership has been a successful element of black economic empowerment (BEE) and almost universally accepted by all political parties and stakeholders, including the ANC, organised labour, large business and the DA, as set out in its 2019 election manifesto.
For many multinational companies, investing in South Africa can challenge even the most experienced international teams in novel ways. Specifically, a multinational that has identified a South African company to acquire, and that is in the process of evaluating or implementing the transaction, should carefully consider both BEE ownership implications and the public interest factors considered by South Africa’s Competition Commission.
Published in SAICA magazine: Employee Share Ownership Plans (ESOP’s) have become increasingly common for multinational, listed and unlisted companies operating in South Africa as a way to attract, retain and reward their employees. ESOP’s can also be effective mechanisms to drive companies’ Broad-based Black Economic Empowerment (BEE) strategies and to align stakeholder and employee values. Accounting for these complex arrangements is a critical success factor that must be carefully considered when evaluating the feasibility of an ESOP.
Multinationals operating in South Africa must have a Black Economic Empowerment (BEE) status that enables them to sustainably compete, generate profits, and create value.
Employee Share Ownership Plans (ESOPs) involve providing targeted employees with an ownership stake in their employing company.
Large multinational transactions that require Competition Commission approval can benefit greatly from the inclusion of Employee Share Ownership Plans (“ESOPs”), which can serve to address the public interest considerations of the Competition Commission and to provide other benefits to the parties to the transaction. Multinationals considering implementing ESOPs in this context need to clearly understand the commercial and economic impact on the transaction and structure the ESOP carefully.
ESOPs (Employee Share Ownership Plans) involve enabling employees to share in ownership of the company they work in. Employee ownership is gaining momentum in South Africa as more companies recognise the benefits it offers. These include improved business performance, better employee relations, socio-economic benefits, and positive BEE outcomes, among others. These are particularly relevant in context of South Africa right now, where the country is facing a cost of living crisis, skills shortages, and high unemployment. For every business, employee ownership should be considered as part of the BEE and business strategy.
Research indicates that when employees feel a sense of ownership in the organisation they work for, they have increased job satisfaction and show more commitment and loyalty which then leads to improved productivity, innovation and profitability. It’s for this reason that organisations globally use Employee Share Ownership Plans (ESOPs) as a form of employee ownership, to increase employee engagement, align employee and shareholder goals, reward employees and as a tool for business succession planning.
