Why do employees participate in employee share plans? A conceptual framework

Non-executive employees are increasingly being offered the opportunity to participate in employee share ownership plans. In many cases, companies provide their employees with shares or options as a ‘gift’, either on a one-off or regular basis. Many plans, however, are structured so as to require employees to contribute to the value of the securities. In the case of contributory plans, the reasons employees choose to participate are not always clear. This article reviews existing studies and presents a conceptual framework to explain why employees participate in employee share plans. It examines the relationship between the decision to participate in a plan and a number of demographic and workplace-specific variables. It identifies key factors that may moderate this relationship, such as the extent of company communication on the plan and company performance. The conceptual framework is derived from a synthesis of previous studies and semi-structured interviews conducted with human resource managers and trade union representatives within publicly listed companies.