GEO INSIGHTS

The Menke Group facilitated AV Construction's transition to becoming 100% employee-owned through an Employee Stock Ownership Plan (ESOP), allowing employees to benefit from company ownership and ensuring a strong succession plan. ESOPs, which incentivize and reward employee productivity, offer advantages to both employees and company owners seeking to maintain independence and community presence. With ESOPs particularly effective in companies reliant on human capital, AV Construction aims to provide excellent retirement benefits while maintaining its commitment to healthcare development excellence.

Computershare has partnered with AIB to provide an Irish "Save As You Earn" (SAYE) programme, allowing clients to use AIB as a savings carrier for their approved SAYE schemes. The SAYE plan enables employees to save a portion of their net pay to purchase shares in their company, with the option price often discounted by up to 25%. This flexible plan offers employees the ability to profit from company performance while minimizing share price risk, as they can choose to take their savings back if share prices do not rise.

The information technology sector leads investments in employee share schemes in Hong Kong, contributing HK$38.5 billion, which accounts for over half of the total annual spend of HK$72 billion among listed companies. The adoption of employee share plans has surged over the past decade, with 83.6% of listed companies now offering them, primarily in the form of share options and share awards, the former being more common among smaller companies. Larger companies tend to have a mix of both options and awards, with the healthcare and IT sectors showing the highest adoption rates for share awards, at 58.7% and 46.6%, respectively.

The US IPO market, although challenging over the past two years, shows signs of improvement in 2024 as interest rates stabilize and stock valuations recover. Despite geopolitical uncertainty, IPO proceeds reached US$23.94 billion last year, a marginal increase from 2022, with the market showing resilience and attracting cross-border listings. Technology and biotech sectors are driving IPO activity, buoyed by strong investor support and market performance, while ongoing geopolitical tensions and market volatility remain challenges for potential issuers. However, a positive start to the year and pent-up demand may encourage more companies to pursue IPOs in 2024.

India's robust IPO activity in 2023, with 234 listings raising US$7.89 billion, reflects the country's strong domestic economy and rising corporate earnings, positioning it as a bright spot amid global IPO trends. The second half of the year saw particularly buoyant activity, contributing to India's climb to the world's seventh-largest market by total market capitalization. With momentum carrying into 2024, India anticipates further IPOs across various sectors, driven by favorable market conditions, increasing foreign capital inflows, and a growing middle class investing in equity markets. Additionally, initiatives like the establishment of an international finance center in Gujarat aim to enable Indian businesses to access global capital markets more efficiently, signaling India's outward-looking approach amid its rise as a leading global economy.

Hong Kong-listed IT companies led investments in employee share plans with HK$38.5 billion, representing over half of the total spending in 2022. Healthcare followed with HK$11.5 billion and consumer discretionary with HK$9.7 billion. The adoption of employee share plans surged over the past decade, reaching 83.6% of listed companies by 2022, up from 66.1% in 2012, driven by strategies to attract and retain talent through share options and awards.

Australia is trailing behind the US and advanced European economies in implementing employee share schemes, as revealed by the first global survey spearheaded by tax partner Shaun Cartoon and lawyer Eileen Liu. Conducted by a team of specialists from Arnold Bloch Leibler, Baker McKenzie, KPMG, and Tapestry Compliance, along with issuers and academics, the survey measured operating environments across 26 countries. Australia's complex tax rules and regulatory constraints on unlisted companies have hindered the scaling up of share plans, with tax incentives playing a significant role in decision-making for companies.