Success at Exit
A wireless payment company wanted to incentivise senior staff to build shareholder value ahead of an exit - In 2006, we implemented a tax-efficient share option scheme for them, the Enterprise Management Incentive at an exercise price of £6.15 per share. The company was sold earlier this year for £117 per share. Several employees made six figure gains and 2 employees became instant millionaires.
Succession Planning in action
Procurement and purchasing services company
Each year the company makes profits, the founder sells shares into a Share Incentive Plan (SIP) which then awards free share awards to all the employees (based on salary and service). The founder also sells shares into an Employee Benefit Trust to cover Enterprise Management Incentive options for key management above and beyond the SIP awards. Using the trusts and share schemes together means that the founder can sell his shares tax efficiently and enable management and employees to build a significant stake tax efficiently over timeImplementation Case Studies.
Implementation Case Studies
30 employees, London – This fast growing company is a specialist consultant in telecommunications and networks. From the outset, the shareholder directors wanted to create a share owning culture within the company based on superior performance. RM2 implemented an Enterprise Management Incentive plan with option exercises based on stretching profit and turnover targets. RM2 also set up an Employee Benefit Trust to grant the options and acquire shares from existing shareholders on exercises. This has prevented dilution and delivered value to the shareholders. Cross options between the principal shareholders were introduced by RM2 Community members to protect both the Company and shareholders.
French Listed International Diagnostics Group
100 UK employees, Basingstoke – The parent company planned a share offer to its global workforce on advantageous terms. For UK employees, RM2 designed and implemented a HMRC-approved Share Incentive Plan involving employee purchased and matching shares. The Plan offered tax advantages for employees and NIC savings for the company. RM2 gave onsite presentations and provided telephone and email helplines for employees. RM2 also set up a dedicated website to launch the Plan and receive applications, which helped achieve a high take-up level. RM2 acts as Plan trustee and administrator.
Independent Financial Adviser
200+ employees and partners, London and Nationwide – This Company provides independent financial advice to private and corporate clients throughout the UK. The company wished to incentivise its employees, directors and partners through performance-based equity awards. RM2 worked with the company to design and launch a wide range of incentives, including Enterprise Management Incentives, a Deferred Share Purchase Plan and several Unapproved equity plans. RM2 administers the plans for the company and advises on the share-based payment costs to be charged to the accounts under option expensing.
Auto Distributor UK Arm of Overseas Listed Parent Company
2200 UK employees, UK Wide – Again the Overseas Parent Company wished to include its worldwide workforce in a share purchase plan. RM2 was responsible for the design of the plan for UK personnel and continues to carry out the ongoing administration. Employees purchase shares on a monthly basis through the HMRC approved Share Incentive Plan. The employees can also use their annual bonus or part of it to acquire further shares to the £1,500 per annum limit. [Under these arrangements the employees can also track their share plans on a dedicated web-link].
Further help and information on employee share schemes
For detailed guidance on all aspects of the design, implementation and administration of employee share schemes see "Employee Share Schemes: a Guide for Directors" (2012/13 edition). You can view the Guide online or ask for a free consultation.