Following the fallout from the Banking Royal Commission, we saw
the inextricable link between short term performance pay and toxic
corporate culture. In an effort to correct these corporate
governance issues, Commissioner Ken Hayne called for companies to
realign their executive remuneration with risk management efforts
and long-term financial sustainability. A commonly overlooked, but
powerful mechanism that can help companies achieve these Hayne
recommendations is an employee share scheme
(ESS).
An ESS is a tool employers use to remunerate employees and align
employee interests with their own. A well devised ESS can also:
- motivate key employees to build sustainable long-term value by
giving them a vested interest in the employer's ultimate
success, rather than fulfilling short-term performance goals;
