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• Employee Share Ownership (ESO)
• Making the most of your employee share ownership plan - communicating with your employees

Making the most of your employee share ownership plan - communicating with your employees

The way you communicate your employer share ownership plan (ESOP or ‘share plan’) with your employees will make a big difference to how successful it will be.

Your organisation will gain the most benefits from a share plan if your employees understand why an offer is being made and what the benefits of participating are. Providing relevant information to all potential participants is also a legal requirement. This guide gives you an idea of how to write and implement a communication strategy for your share plan.
The way you communicate your offer will depend on many factors, including

• your budget
• the number of eligible employees you have and where they’re located
• the communication channels that exist in your company (e-mail, intranet, staff presentations, staff meetings, newsletters etc)
• your employees and what they already know about share plans

You need to consider each of these points when developing your communication strategy, to ensure that the share plan is communicated in the most effective way for your organisation.

Special note

Your employees must make up their own mind about whether they wish to participate in a share plan. You must not provide employees with financial advice, or coerce them to participate in an offer.
There are legal restrictions and requirements (especially in the Corporations Act) about offers or invitations to participate in share plans, including what goes in prospectuses, advertising and publicity, securities hawking and advising. As an employer you must seek legal or similar professional advice about those requirements, including the matters in this booklet.

More information can be found at www.asic.gov.au

Why is a communication strategy so important?

One of the key aims of the communication strategy is to encourage as many people as possible to participate in the share plan.
The table below lists some other aims of the communication strategy. Ongoing communication with your employees will help to achieve the longer-term aims.

How to make your communication strategy effective

An effective communication strategy

• Clearly states the reason for the offer and the purpose of the share plan
• Uses clear and concise language wherever possible. This is often difficult due to certain strict compliance requirements affecting share plans, and the need to use precise legal terminology
• Takes into account the audience and caters for participants from non-English speaking backgrounds (if there are eligible employees who are culturally and linguistically diverse)
• Clearly states the opening and closing dates of the offer
• Provides a timeline for the offer period and describes each of the activities that appear on the timeline
• Clearly sets out any downside risk from participating in the share plan and considerations employees must take into account (for example taxation) when considering the offer
• Directs employees to seek advice from a suitably qualified professional about participation in the offer
• Provides an opportunity for employees to ask further questions. This can be via staff presentations, or by telephone, fax or e-mail, or via an intranet site, noticeboard or newsletter where employee questions and answers can be posted for all employees to see
• Uses appropriately trained staff to help communicate with employees
• Ensures all managers and (where relevant) union representatives are briefed about the offer and timeline in order to be able to answer questions from employees or be able to direct them to more information

Stages of the communication strategy

There are two main stages in the communication strategy

Stage — 1 The initial offer

Your initial offer can be broken into three parts
a. Pre-offer
This is usually a message to your employees to announce that an offer is on the way. Larger organisations may use a newsletter or an article in the staff newspaper. At this stage, exact details of the offer are not yet able to be disclosed.

b. Offer
This category covers any materials that are available to your employees during the offer period. As a minimum, your employees must receive an invitation letter and booklet outlining the terms of the offer that is being made, and in many cases a prospectus or information statement. This information may also include a description of the potential tax implications of participating in the plan, and details on where employees can find more information, for example an intranet site, staff presentation etc. Offer information is usually put together to make up an ‘invitation pack’. The contents of the invitation pack are explained later in this booklet.

c. Post offer
This is information that your employees receive after the offer and may include a welcome letter, holding statement, privacy statement and other company and specific information.
Note: There are regulations (including the Corporations Act) that cover what can and can’t be disclosed before or during an offer. Further information can be found at www.asic.gov.au

Stage 2 — Ongoing communication

Ongoing communication about the share plan is likely to help foster a sense of ownership among employee shareholders and to reinforce the benefits of participating. This is particularly important during periods of adverse market conditions and company performance.
Ongoing communication could include company announcements, measurement against specific performance and vesting criteria, and other shareholder information.
If your company has an intranet site it is sensible to keep up-to-date information about the share plan on the site (see below for further details). If not, information about the plan can be communicated through staff newsletters, noticeboards or team meetings.

Minimum requirements and some strategies to strengthen your communication

Listed below are the various methods generally used to communicate an ESOP. These include mandatory requirements such as the invitation pack, to other communication tools to enhance your overall message.

The invitation pack

The invitation pack is sent out each time an offer is made and will usually contain the following elements, as well as any requirements of prospectus legislation contained in the Corporations Act or other legislation:

• Invitation letter
• ESOP booklet
• Acceptance form
• Taxation summary
• Questions and answers
• Key dates

The following information must be included in the invitation pack, usually in the invitation letter or ESOP booklet:

• Individual share allocation details
• A summary of the key elements of the offer
• Details of the opening and closing dates of the offer
• A summary of what employees need to do to accept the offer
• Any vesting requirements
• Any forfeiture restrictions
• What happens if the employee leaves employment with you
• Where employees can get a copy of the plan rules
• Details of how employees can access their shares
• A direction to seek professional advice

It is also a good idea to include the following:

• An outline of why the offer is being made
• A general summary of tax consequences of participation
• An outline of what ongoing communication employees will receive

All eligible employees who are invited to participate in a share plan offer must receive the same information. This could include employees who are on maternity leave, long service leave, sick leave etc. It is important to note who these employees are to ensure that they are sent the appropriate offer material in time for them to consider the offer.

Presentation or roadshow

A presentation or roadshow gives employees the chance to hear ‘first hand’ about the share plan offer. Ideally, the presentation should

• Be well prepared, and suited to the employee audience
• Use simple language wherever possible
• Allow time for questions from employees
• Be presented at all major sites where employees are located
• Be presented by someone who understands the offer very well and who will have credibility with the employees. This could be a staff member or external representative, but it should be a person who the employees can relate to, and someone they will listen to

Other considerations

• When preparing the presentation timetable, take into account shift workers so that the maximum number of employees can attend
• The same presentation should be made at all locations. Of course, the questions and answers may vary each time; but the core material must remain the same

Intranet site

An intranet site can be an ideal place for any share plan material to be kept before, during and after an offer. The categories of information provided on the site at the time of an offer may be determined by legal requirements contained in the Corporations Act or other legislation. They could include

• A copy of the offer booklet and acceptance form
• Frequently asked questions
• Current share price (for listed companies)
• A copy of the taxation summary
• Calculation aids for employees such as an offer ready reckoner or a performance measurement vesting tool
• Offer timetable, including details of any presentations.

The type of information that can be posted on the site at other times may be covered by legal requirements contained in the Corporations Act or other legislation. It could include:

• Offer booklet and tax information for each offer made
• Questions & answers
• Withdrawal and/or exercise procedures
• Section 139E Tax Election Form
• Company share price (updated daily if possible)• Company Insider trading policy
• Link to Australian Stock Exchange website
• Link to share registry website (if listed)
• Link to share plan administrator website, if administered externally
• Details of where employees can find out more information
• What employees should do if they leave employment with the company

Staff newsletter

For larger companies, a staff newsletter can be used to communicate information about your share plan (if allowed under legal requirements contained in the Corporations Act or other legislation). It could include participation rates, offer closing dates, and share plan-related company milestones.

E-mail

In companies where most or all employees have access, you may use e-mail to advise of a range of information. (You will need to get legal approval for this, as all companies’ circumstances are different.) This could include:

• the share price at the start of the offer
• the share price at which allocation was made
• a reminder that the offer is open
• details of when the offer material is being distributed to them
• a reminder about the closing date of the offer
• the presentation timetable
• where employees can find more information.

If you use email to advise eligible employees about the offer, you must send the same information to employees who don’t have access to e-mail.

Electronic offers

For some companies, the most simple and effective means of communicating an offer to employees will be via e-mail or the internet/intranet. If you are considering an electronic offer, you should discuss this with your legal adviser.

Help-line or call centre

For larger or more complex offers you may want to consider setting up a dedicated help-line to take calls from employees. This may include a ‘free call’ or ‘free fax’ line and can be set up internally or externally. The calls can be logged as a way of checking on the effectiveness of the communication and offer material. Analysis of help-line calls can highlight the need for improvements in communication for current or future offers.

Sample communication strategies

Here are two examples of effective communication strategies used by two different-sized companies when launching their share plans.
Company A
Number of employees: 1200
Type of ESOP: Loan Plan
Length of offer: 3 weeks

 
Company B
Number of employees: 50
Type of ESOP: Both an Exempt Plan and a Deferred Plan were offered
Length of offer: 10 days

Communication checklist

The following list summarises the key steps in developing a communication strategy for the implementation of a share plan:

1. Complete share plan design
2. Determine budget for communication
3. Plan communication strategy for offer, considering:
   - what are the key objectives of the plan?
   - how many employees do you think will participate?
   - how many employees will receive the offer material?
   - where are the employees located?
   - what communication channels are already in place, for example staff newsletter, company intranet, online bulletin board, e-mail?
   - what types of offer materials will be used, for example invitation letter, booklet, intranet site, e-mail)?
   - how will the materials be distributed?
   - what is the timing of the offer?
   - what internal and external resources will be required?
4. Design / produce communication materials
5. Implement communication strategy
6. Plan strategy for ongoing communication of share plan information
   - what information will be provided, for example share price, taxation information?
   - how will the information be provided, for example intranet site, employee briefing updates?
7. Implement ongoing share plan communication strategy

Where can I go for further information?

Further information on communicating your ESOP can be found at:
• www.workplace.gov.au/eso
• www.asic.gov.au

• 1800 181 088 – ESO enquiry line
• employeeshareownership@deewr.gov.au
• GPO Box 9879, Canberra ACT 2601

Important notice
This publication is produced for general information only. It does not represent professional advice given by the Commonwealth or any person acting for the Commonwealth for any particular purpose. Users should make their own further enquiries, (including as to the accuracy, currency, reliability or completeness of any information contained in this publication) and obtain professional advice where appropriate, before making any decision to take action or not take action on any matter which it covers.

To the maximum extent permitted by law, the Commonwealth and all persons acting for the Commonwealth in preparing this publication, disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based upon the information in this publication.

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