👉 Background: Virgin Australia first hit the Australian market back in 2000 under the name Virgin Blue. In 2011, it changed its name to Virgin Australia. But early on in the COVID pandemic, Virgin Australia went into administration and later was acquired by private equity giant Bain Capital for $700 million - including more than $5 billion in debt.

👉 What happened: Since Virgin Australia's acquisition, it's been all clear skies with earnings of $519 million in the last financial year. And now, Virgin Australia’s CEO has told its 8,000 staff that they could all receive $3,000 worth of Virgin shares pre-IPO-listing, or a “takeoff grant” of share rights. But of course, there are some major caveats around this share offer:

• Caveat 1: Virgin Australia needs to successfully IPO, which it is expected to do by the end of June
• Caveat 2: These shares would only convert into ordinary shares (ie shares that can be sold) if the employee sticks around for two years post-IPO

‍👉 What else: Bain, the private equity owner of Virgin Australia, is expected to sell off up to 30% of its stake as part of the IPO. But despite Bain selling down, it doesn’t want employees to leave at such an important time.

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What's the key learning?‍

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💡Employee Share Schemes are programs where companies offer employees equity, like shares or options, as part of their remuneration. It’s a way to reward employees and create stronger alignment between their day-to-today work and the company’s overall performance.

💡It means that if the business performs well and the share price climbs, employees can benefit directly. These employee share schemes are also a useful retention tool. In the case of Virgin Australia, the employees need to stick around for 24 months before the shares can be sold. This can help reduce staff turnover as well.

💡Other tech companies use Employee Share Schemes as part of their appeal to employees including Atlassian who pays its staff $1.1 billion USD per year through shares.