The Australian Mines and Metals Association (AMMA) hopes to deliver the results of its employee share scheme survey to Kevin Rudd in a meeting next week, the company’s chief executive Steve Knott told MINING DAILY.
Knott said the AMMA was currently surveying its members to ask their opinion on the Federal Government’s proposal to crack down on employee share schemes.
The Government is proposing taxing employee share schemes when employees are granted discounts or options on shares, rather than when they vest — that is, when employees take ownership of the shares or sell them.
Knott said the proposed change to the legislation was infuriating AMMA’s member companies.
“We already know that more than 90% of member companies have a share scheme in place and in some cases they have been in place for more than two decades,” he said.
“The share scheme has been trashed over night by an ill considered decision that was handed down is last week’s budget. The proposed legislation has been met with so much hostility that I can honestly say I have never seen anything like this in my 20 years working for the minerals industry.”
Knott said the Government’s proposed changes would make it difficult for resource companies to offer appealing remuneration packages in the current environment where salary freezes are not uncommon.
“Significantly, at present, as the resource sector struggles in the current economic conditions, employee share ownership plans are also particularly helpful in terms of employee engagement and alignment for resource companies with low cash reserves unable to offer high salaries or bonuses,” he said.
According to Knott, companies have already started to put their share scheme bonuses on hold.
Alcoa, which has more than 75% of shop-floor employees taking part in its existing employee share plan, has suspended these arrangements and is converting planned salary sacrifice share purchase arrangements to taxable salary in future pay periods.
“Woodside has also suspended their scheme,” Knott said.
“The whole thing is a basket case. The Government has been poorly advised and as such, their proposed legislation is only serving to hurt the mining industry further.”