Employee-Participation has got a lot of benefits – like employee loyalty, motivation and responsibility. Disadvantages are high costs and a large administrative effort. The dutch company Monidee has developed a software called tOption to make employee stock programs easy. Hans van Tol, Co-Founder and Head of Sales & Business Development from MonIdee Group, talks with us about his Business Model and the importance of employee-participation in the Netherlands.
GoingPublic: Mr van Tol, your internal trading platform “tOption” offers an opportunity to optimize employee stock option programs. Nevertheless, could you please introduce this business idea to us in a few words?
Van Tol: Our platform “tOption” offers the on-line administration, registration & execution possibility for many different types of programs. This can be divided in Reward Plan Programs, e.g. Companies being an Employer, offers shares, options, bonusses etc. to their Employees, as well as Internal Exchange Programs like Companies, funds, etc. offering trading possibility in your own private market for open and closed groups, like trading between the companies’ shareholders and/or investors.
Life example where a cooperative offers their certificate-holders the trading possibility between each other through the tOption-Internal-Exchange. At the same time, the employees of the cooperative received an employee reward plan, based upon on the same cooperate-certificates:
How important is employee-participation in the Netherlands?
Employee-participations in the Netherlands are getting more and more attention. As an employee reward product, it’s well known within listed companies. Today, we see a large grow of the use of employee reward plans and participations by non-listed companies, too. Looking at fast growing companies, like Start-ups, small and mid-size companies, offering employee-participations to employees can result in lower salary costs and make the employees more committed to the company.
Are there notable differences between the Netherlands and Germany in this regard?
In percentage, employee-participation in the Netherlands is rather equal to Germany . Looking at the UK and US, Europe still has an enormous growth potential.
What are the main benefits for internal market platforms compared to public exchanges?
Running an internal market, there are no high listing costs. Also less legislation will be required, using the internal market. Looking at volatility of the share prices, excessive volatility trading within the internal markets in general, will be lower, compared with public exchange trading. Considering the IPO market, (potential) investors can be selected upfront by the company going public. A hostile takeover can be avoided. For Example: An IPO-Company can offer e.g. 90% of their shares during the IPO process on the Internal Exchange. At the same time, the company can choose which investors are allowed to participate in this investment. Approved investors can place their bids online and hence investments be generated. After this IPO-phase, the company can place the last 10% of the shares on the public exchange. At the public exchange, anonymous investors can only invest in the last 10% of the shares. A hostile takeover has been avoided.
In general, a public exchange generates more liquidity. However, in most cases liquidity and exit options generated on the internal exchange will prove to be sufficient.
Internal Platforms are often used by family owned companies in private hands. Why is an IPO not an option for those companies?
The internal-market is certainly a great solution for the IPO market. MonIdee’s platform tOption offers internal markets for:
- Family owned companies,
- Private owned companies in general,
- Venture capital portfolio’s
- Funds (wind-mills, real estate, etc.)
- Crowd funding In general you can say, the platform offers the solution for “trading anything with a value and with a need for more liquidity and exit options. Create your own private market”.
German retail investors still lack notable interest in stocks. What could be done in your opinion to revive the capital markets – are employee-participations a somewhat convincing incentive?
The internal exchange creates a cheaper way to revive the capital markets for companies and reach out to more new (external) investors. New investors are fond of investing in companies where employee-participations are in place. Companies, having employee-participations in place, often have lower salary costs, so less need for additional investments in their staff. The more employees with participations you have, the more show to be committed to your company.
GoingPublic: Mr. van Tol, thank you very much for talkting to us!
Hans van Tol is a Chartered Financial Analyst (Vrije Universiteit Amsterdam) and holds a Master of Financial Economics degree from Tilburg. During his early career he worked for Bank Mees & Hope, ING Bank. Later on he became a Director at the Treasury Department of Generale Bank (now Fortis Bank). van Tol surveyed several practical studies at the University of Oxford and Fontainebleau.
The Interview was conducted by Svenja Liebig