| Yes, employee stock plans are common. It is generally recognised that, in many cases, the key to obtaining an advantage over competitors lies in getting the best from employees. Moreover, the nature of a company's business (e.g. hi-tech computer software) can mean that profitability and growth are directly dependent upon employees' skills and the degree to which employees can be incentivised to make efforts over and above those they are contractually obliged to make. A share option or a similar award is designed to motivate employees and to encourage longer term loyalty. Senior executives have come to expect equity participation in some shape or form and companies which do not offer share incentives can have problems in attracting and retaining key personnel. In the case of more junior employees, research has demonstrated that, by participating as part-owners, they identify more closely with their employer company's objectives (as opposed to focusing exclusively upon the much narrower objective of maximising take home pay). |
