Case study

AMC Consultants

How AMC Consultants leverages a strong Employee Share Ownership Plan with liquidity to incentivise and motivate staff

Case Study: Employee Share Plans

Employee share plans, also known as equity compensation or stock option plans, are a type of employee benefit that allows employees to purchase company shares, often at a discounted price. They have become an increasingly popular way for companies to engage and retain their employees, as well as align their interests with those of the company.

In today’s competitive job market, attracting and retaining top talent is crucial for businesses to succeed, and employee share plans play an important role in achieving that goal.

Employee loyalty is a valuable asset for any business, and companies that foster a sense of ownership and responsibility among their employees often see improved performance, higher levels of engagement and lower staff turnover rates.

Employee Share Plans promote employee loyalty

Employee share plans support employee loyalty by giving employees a stake in the company and a direct financial interest in its success. In this way, employees feel a greater sense of attachment to and involvement with the company and are more likely to work harder to help it succeed.

PrimaryMarkets Trading Hubs have been used to support employee share plans and clients like Ausmincon, a leading mining and resources consultants, has benefited from the employee loyalty the plans can drive.

Ausmincon has been an employee-owned company since it was created in 1987 as the holding company for the AMC Consultants group of operating companies. AMC’s Managing Director, Patrick Smith, acknowledges that “Our company’s employee share plan has benefited us greatly. During the cyclical mining industry downturns, the incredible commitment of employee shareholders has helped the company get through challenging times”.

This article explores the impact of employee share plans on employee loyalty and the important role that liquidity plays in their success. We will look at the advantages of employee share plans, including increased engagement and motivation, alignment of employee and company goals, attraction and retention of top talent, and a boost to company culture and morale.

We will also examine the importance of liquidity for employee share plans and the various factors that can affect it, as well as explore approaches to ensuring liquidity and balancing it with employee loyalty.

“Our company’s employee share plan has benefited us greatly. During the cyclical mining industry downturns, the incredible commitment of employee shareholders has helped the company get through challenging times.”

Patrick Smith

Managing Director, AMC

Advantages of Employee Share Plans

Employee share plans, also known as employee share ownership plans (ESOPs), are a valuable tool for businesses to promote employee loyalty and engagement. By providing employees with a stake in the company’s success, these plans aim to align the interests of employees and the company, leading to a more motivated and dedicated workforce. In this section, we will explore the various advantages of employee share plans and how they can contribute to the success of a business.

1. Increase engagement & motivation

By giving employees a direct financial interest in the company’s success, these plans help to foster a sense of ownership and pride in one’s work.

This leads to improved productivity, higher levels of customer satisfaction, and a more motivated workforce overall.

2. Align employee & company goals

When employees have a stake in the company’s success they are more likely to work towards the same objectives as the company.

This leads to a more cohesive and motivated team, as well as improved overall performance.

3. Attract & retain top talent

Employee share plans play a key role in attracting and retaining top talent, as they provide employees with a valuable benefit that is not easily replicable by competitors.

This makes a company more attractive to top talent and help to retain employees with the company for longer, especially in such a competitive job market.

4. Boost culture & morale

By fostering a sense of ownership and pride among employees, these plans help to build a strong and positive and safer workplace culture.

This, in turn, contributes to a more positive and productive work environment, improving morale and overall employee satisfaction.

The Role of Liquidity in Employee Share Plan Success

Liquidity plays a crucial role in the success of employee share plans. It refers to the ease with which employees can convert their shares into cash, and it can greatly impact their overall employee satisfaction with the plan. If employees are unable to access their equity when they need it, they will tend to undervalue and be dismissive of the plan. They also feel trapped and lose confidence in the plan, leading to decreased employee loyalty.

Ausmincon’s MD Patrick Smith agreed liquidity was the main driver for setting up their Employee Trading Hub, “We needed a way for shareholders to easily set their own buy and sell prices” after receiving ongoing requests from shareholders for liquidity opportunities.

Facilitating liquidity for any business can be a challenge, not only does it require a platform to support active trading, but there are also a myriad of regulations to comply with. “AHL doesn’t have a broker’s license or a license to run a market, so we had to find a solution”. After scouring the market it was clear there was one platform that could meet their needs, “PrimaryMarkets was the only Australian-based provider that could deal with our setup”.

There are several factors that can affect the liquidity of employee share plans, including:

  • The size and stability of the company
  • Conditions of the financial markets 
  • Terms of the plan itself

For example, smaller companies may struggle to provide liquidity due to limited financial resources, while larger companies may have more robust alternatives for employees to sell their shares.

We needed a way for shareholders to easily set their own buy and sell prices

Patrick Smith

Managing Director, AMC

Balancing Liquidity and Employee Loyalty in Employee Share Plans

Balancing liquidity and employee loyalty is a delicate process for companies looking to implement employee share plans. On the one hand, offering greater liquidity can increase employee satisfaction and engagement, but on the other hand, it may also encourage short termism and reduce employee loyalty.

It’s important for companies to strike the right balance, taking into account the specific needs and goals of their employees, as well as the company’s goals, financial resources and market conditions.

Approaches to Ensuring Liquidity in Employee Share Plans

There are several approaches that companies can take to ensure that their employee share plans offer the right level of liquidity. These include setting up buy-back facilities for employee shares, allowing employees to sell their shares back to the company, or offering cash incentives to encourage employees to hold onto their shares.

Additionally, companies can provide regular financial education and support to help employees understand the value of their equity and make informed decisions about their investment.

Often, it takes a catalyst or a culture change to begin the process of increased employee share liquidity, “We [hoped] it would stimulate share trading … people … need time to get used [to] it being there and them having the initiative to buy and sell rather than the Company Secretary holding their hands every step of the way.”

It’s important to seek professional advice and support to ensure that the right approach is taken to ensure the success of the employee share plan.

Employee Share Trading with PrimaryMarkets Trading Hub

PrimaryMarkets brings liquidity to employee share plans by providing a Platform for companies and allowing employees to trade their shares with other investors. The Platform provides a convenient and secure way for employees to access liquidity, while also supporting the company’s goals of building employee loyalty and motivation.

With PrimaryMarkets, companies can ensure the success of their employee share plans by balancing the need for liquidity and employee loyalty.

But the process doesn’t have to be harder than it needs to be, with PrimaryMarkets full featured Trading Hub offering a seamless, technology-first solution for Employee share plans. “Onboarding was very easy” Patrick Smith MD says.

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