1. Employee Share Plans Maximum Business Value Craig West

3. did you know?

4. Of the estimated $8 trillion of corporate equity in the United States, employees own about $213 billion through ESOPs and similar stock plans $213 B in US ESOP’s

5. ESOP companies that combine employee ownership with a participative management style grow 8-11 % per year faster than they otherwise would have. 8–11% Faster growth

6. In the United States, more than 11,500 companies have an ESOP covering almost 9 million employees. 11,500 companies & 9 million employees

7. Competitive Edge “People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps” - Mary Kay Ash

8. Performance examples! Year 1 Year 2 Year 3Year 4 Year 5 Net Profit (average improvement) 55%51%35%40%43% Staff Turnover (as a percentage of total employees) 13%10%6% 4% Absenteeism (average days per employee) 53322

9. Rewarding key people who are already collaborating to drive the business ! What are you telling your staff by the way you pay them ?

10. Base Remuneration Salary & Wages Other benefits Short Term (annual bonus) Cash bonus Commission Cars Fringe benefits Entertainment Income Continuance Policy Other benefits Long Term (loyalty) bonus Retained Bonus Equity Savings Plan Equity Shadow Share Plan Replicator Plan

11. Key people as business owners ?

12. “Employee ownership is world changing. It is the way ahead…in the global economy. It reflects that human capital is becoming more important than physical assets… The global economy will succeed when employees feel a stake in the business” Gordon Brown MP – Chancellor of the Exchequer

13. Sharing the profit “The truth is that profit sharing doesn’t create employee involvement - it requires it.” Ricardo Semler

14. Ladder to Equity

15. 1. Employee – earning income (salary/wage/hourly rates etc. ) – this is where most employees sit ( and stay ). 2. Income model – the first step on the ladder then is to boost that income and this is quite common – we often see companies paying bonuses, commissions on sales, incentives etc. to increase an employee’s income.

16. 3. Profit share – most equity plans begin with this simple step and in fact many end at this step – simply providing a share of profits to employees is a great additional incentive as they are directly rewarded as a result of the financial performance of the company in the same way that a business owner typically would be.

17. 4. Equity – whilst there are many equity plans available our Peak Performance Trust provides a formal structured mechanism to incorporate stages three, four and five into any business succession plan - this allows employees to transition into an equity ownership position within the business they work for.

18. 5. Control – often this step is never utilised though on occasion has substantial benefits in terms of succession not only of business management but also ownership. Ultimately control means that employees can be transitioned through the earlier four stages and end up in a position of control – this may be that they take over general management or CEO of the company, it may be that they end up with a seat on the board at some future date however this step is not to be rushed

19. Extra Profit Share 20% Target Profit Current Profit Your company Peak Performance Trust

20. Shareholders Company Participating Employees Peak Performance Trust Shares in Company extra profits

21. Peak Performance Trust – Stage One Shareholders Key Employees Existing Company Co-Trustee Peak Performance Trust

22. Peak Performance Trust – Stage Two Shareholders Key Employees Existing Company Co Trustee Peak Performance Trust buys equity profit share % $ unit holders

23. Identify key employees and KPI’s Financial Modelling Employee Education Introduce the PPT Integrate the PPT Ongoing- Communication and Management

24. Case Studies

25. LJ Hooker Commercial Central Coast Winner of the 2010 ESOP of the year award using a Peak Performance Trust. Award based on substantial reduction in sick days and improved staff retention, as well as a noted increase in performance and participation.

26. Ty Blanche - LJ Hooker: “We have created a more understanding team of people, and added value to the individual’s performance congruently.”

27. “both financial services and property management referrals from employees participating in this scheme increased at a higher level than before. I put this down to their seeing value in contributing to the company’s bottom line because they will share in the profit.”

28. Questions & Discussion

29. Craig West Succession Plus telephone: 1300 665 473 cwest@successionplus.com.au Visit www.successionplus.com.au Follow us on: