Employee equity plans are booming in Asia – what does this mean for Australia?

Australian HR professionals seeking to attract and retain top talent in their organisation may find valuable insight from the growing popularity of employee equity plans across Asia.

Experts predict that the Asia-Pacific region will experience a shortfall of 47 million workers by 2030 at an estimated annual cost of $4.24 trillion, largely because of a shortage of skills needed for the region’s tech and fintech industry, which has increased rapidly in recent years.

Similarly, in June, the number of unemployed Australians reached a 50-year low at 3.5 per cent of the population as the country struggles to find workers at the tail end of the pandemic.

Each year, Computershare reviews the popularity of employee equity plans in Asia, and our latest data highlight the important role employee share plans play in the current battle for talent.

Our research shows the popularity of employee equity is increasing across Asia, with 83.6 per cent of Hong Kong-listed companies offering an employee share plan (ESP) in 2022, compared with 66.1 per cent in 2012.

The rising popularity of employee share plans is even more clear when we look at the growth in specific types of plans. Between 2012 and 2022, the number of Hong Kong-listed companies offering share awards increased by 452 per cent, and the number offering share options went up by 103 per cent.

Asian companies offering share awards are also extending them to more employees. The total number of employees at Asian companies receiving share awards increased by 9 per cent* on average per year between 2014 and 2021.

Companies in Asia are boosting their overall investment in employee shares, too, with the value of shares employees receive growing by 10 per cent* on average during the same period.

A separate study funded by Computershare, prepared by the University of Hong Kong and conducted by the University of Warwick, has suggested that employees in Asia feel more closely aligned with their employer’s values and have a greater sense of loyalty and commitment to the company as their employee shares start to represent a greater proportion of their own wealth.

Almost half (47 per cent) of employee share plan member survey respondents said that company shares are the largest, or one of their largest, personal investments, and 82 per cent said that they “do not often” think about quitting.

The survey also suggests that the bigger the share plan, the brighter the picture: as participants’ employee-owned shares begin to form a greater share of their wealth, their feelings of workplace accountability and their sense of loyalty and commitment towards their organisation grows.

They also become happier in their roles and more likely to recommend the organisation as a great place to work.

The lessons for companies based outside of Asia – including Australia – seem clear: employers can leverage employee share plans to help retain talent and recruit new workers.

As global labour markets continue to tighten, we anticipate that more and more Australian companies – particularly those specialising in technology – will seek to follow the lead of their Asia counterparts.

*Refers to compounded annual growth rate

Seth Bohart is the managing director of employee share plans for the APAC region at Computershare.