Serious about Success®

Communicating Employee Share Plans

Workshop – EOG Conference

www.moorestephens.com.au

Charlie Viola, PartnerMoore Stephens SydneyMay, 2012

Getting the best out of your plan

4 Key messages from the workshop

1. Your Employee’s will not see value in the share plan unless they understand it;

2. Unless employees see value in the plan, it wont have the desired effect (retention, reward, alignment etc);

3. Communication is the key to getting the most out of your plan

4. Communication must be in a way that employees can understand and relate it to their own situation

Agenda

Effective Communication of Employee Share Plans

• Share Based Remuneration – Objectives and Failings

• What needs to be communicated

• How do you best communicate the plan to your people

• Outcomes of effective communication

• Our Services

Objectives

Key objectives of any share plan should be:

• Align the interests of employees with the group/ company;

• Align the interests of employees with shareholders;

• Provide a sense of engagement and ownership;

• Act as a retention and attraction tool.

Failings

Based on recent studies, the key failings of ESS plans, were be as follows:

•Employee lack of knowledge/ understanding of the plan;

•Employees seeing no value in the plans;

•Investment market linked;

•Employees not understanding vesting and taxation considerations;

•Often ‘unclear’ plan benefits;

•Offer documents are complicated and difficult to read, especially for less financially literate participants.

Many of the failings are based upon employees not understanding the plan……communication is the key

What Needs to be Communicated?

Key items that will need to be communicated well to obtain maximum benefit:

•Why the plan is in place

•Plan Design

•How securities are allotted

•Performance Hurdles

•Vesting provisions

•Taxation Treatment

•Long Term benefits

•Planning considerations

Method of Communication

Effective methods of communication:

•Briefing sessions- Delivered in ‘layman’ terms

- Capturing all the key information re allotment, vesting, taxation, use post vesting, planning opportunities etc.

•Information Memorandums- Summary of offer documents

- FAQ’s

•Calculators- Value over time

- Benefit of use

Method of Communication

Effective methods of communication (cont.):

•Broadcasts from key management personnel

•Registry accessibility

•Survey

•Specific Point of Contact

Method of Communication examples

‘FAQ’ documents

Method of Communication examples

‘Tax information’ documents

Method of Communication examples

Calculators

Method of Communication examples

Employee surveys

Employee Needs Assessment

Method of Communication examples

Participant wide broadcast

Outcomes of Effective Communication

• Greater Understanding of Plan

• Greater Employee Engagement

• Value in administrative expense

Survey your people…….before and after…….

MSS Services

• Specific Briefing sessions – covering all the required items

• Information memorandums, including:– ‘Frequently Asked Questions’ document

– ‘One Page’ explaining design and benefit

• Calculators

• Survey’s

• Tax Guides

• Reporting Statements

• Contact Line for participants

• Offer of one-on-one meetings for all participants

• Accounting and Valuation Services

• Plan Design and Construction