The performance and characteristics of Australian firms with Employee Share Schemes

Luke Hendrickson, Toni Pachernegg, Maria Boyle, Stan Bucifal and David Hansell

Research Paper 4/2017 |

The characteristics and performance of Australian firms engaged in an Employee Share Scheme (ESS) were explored using Economic Activity Survey data and Australian Tax Office data. ESS payments grew to just over $2 billion in 2014–15 accounting for approximately 0.4 per cent of total wages and salaries in Australia. Large mature companies in Mining and Financial services were more likely to have an ESS. However, the ESS payment share of total wages is on average 4.5 times higher for SMEs than for large firms. This finding suggests that ESS is a more important part of SME employee remuneration. Firms with share based payments had on average a lower level of employee churn, higher wages per employee and higher labour productivity, compared to other firms of a similar size or age. This productivity difference was strongest for SMEs. The data suggests that the incidence of ESS in Australian firms are relatively insensitive to policy change.

JEL Codes: J3, L22, L26

Keywords:employee share scheme, ESS, productivity, start-up, entrepreneurship, wage

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