Employee shares or options are crucial for tech companies to attract and retain skilled staff, according to Deloitte Touche Tohmatsu, which called for a review on the current treatment of such plans.
In an attempt to overcome the exodus of local IT professionals to the US or Europe, technology companies are turning to retention strategies such as employee share and option plans, according to a survey of 400 Australian CEOs and managing directors in the sector.
Respondents rated attracting skilled staff ahead of other concerns such as capital raising, increased competition and new product development.
Joe Galea, Deloitte technology and telecommunications tax partner, said share option strategies are critical to employee motivation.
Trends suggest that 90 per cent of growing technology companies prefer to offer employees share or option plans, he said.
For staff, however, Gordon Little, Deutsche Asset Management's IT director, said employee share or options plans although popular, were not as big a driver as bonuses, training opportunities and the chance to use leading-edge technologies.
Bruce Lakin, CEO of software and portal developer Prophecy International, said employee share options do play an increasingly significant role in attracting new staff, but what was more fundamental was a competitive salary and stimulating work.
"[Share option plans] play a role, but not as much in Australian companies as in international or US companies," he said.
However, Galea believes options plans are vital to the local tech industry to reduce the brain drain' and to attract talent.
"The survey findings reinforce the need to amend the current tax treatment of employee share and option plans," Galea said.
"At the moment there is limited scope for employees to use the 50 per cent capital gains tax concessions introduced from September 1999, which can come as a shock when employees cash out share gains."