Employee Financial Participation Plan Implementation in the United States and the Netherlands: Lessons for Indonesia

Abstract

Employees have a major role in the sustainability of an organization. Employee satisfaction and business accomplishment are equally significant for the company’s sustainability. One of the strategies companies undertake to create a harmonious workplace and stimulate productivity is by giving recognition, awards and/or compensation to their employees. In recent years, equity-based compensation through employee financial participation plans has been becoming more popular. There are several tailor-made participation schemes which may vary among jurisdictions. There include Stock Grants, Direct Employee Stock Purchase Plans, Phantom Stock, Stock Appreciation Rights (SARs) and Employee Stock Ownership Plans (ESOP). Consequently, the employees could be the beneficiary owner of the shares or be actual shareholders in the company. When employees own shares, they will be treated as shareholders. Depending on the restrictions laid out in the employee financial participation plan. This means that employees could be involved in corporate governance in the company.