Employee Share Schemes: A Guide for Directors

2006/07 Edition - Fully Updated

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• The Directors Guide is published by The RM2 Partnership, who specialise in the design and administration of all forms of share-based employee incentives. The Guide provides an explanation, in plain English, of how employee share schemes work and how the greatest benefits can be obtained. The printed Guide is 140 pp, fully indexed and cross-referenced with glossary. You can obtain it free, here. Further information on RM2 is available here.

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Jump to: Contents Page Chapter 1: Introduction Chapter 2: Choosing the right scheme Chapter 3: Taxation of employee share schemes Chapter 4: All employee share ownership Chapter 5: Share purchase by employees Chapter 6: Targetted incentives for key employees Chapter 7: Employee benefit trusts Chapter 8: Share capital considerations Chapter 9: Valuing unlisted shares Chapter 10: Implementing a share plan Chapter 11: Administering a share plan Chapter 12: Plan design - summary checklist Glossary Contacts

Full Contents

1. Introduction

   1. Main types of employee share scheme
   2. Effectiveness of schemes
   3. Articles and capital structure
   4. The ABI guidelines
   5. Use of share schemes by unquoted companies

2. Choosing the right scheme

   1. Clarifying company objectives
   2. Dilution of equity
   3. When statutory schemes are unsuitable
   4. LTIPs
   5. Other practical issues

3. Taxation of employee share schemes

   1. Restricted shares
   2. Convertible securities
   3. New ventures
   4. Gifts of shares
   5. Capital gains tax
   6. Corporation tax
   7. Transfer pricing
   8. PAYE and NICs
   9. Stamp duty

4. All-employee share ownership

   1. The Approved Share Incentive Plan

5. Share purchase by employees

   1. The Approved SAYE Option Scheme
   2. Deferred Purchase Plan

6. Targeted incentives for key employees

   1. Non-statutory share option schemes
   2. The Enterprise Management Incentive
   3. The Approved CSOP Scheme

7. Employee benefit trusts

   1. An internal market for private company shares
   2. Warehousing of employee shares
   3. Selection of trustees
   4. Powers and responsibilities of trustees
   5. Share purchases and succession planning
   6. Treatment of non-share benefits
   7. Other tax issues
   8. Termination of trusts

8. Share capital considerations

   1. Using non-voting shares
   2. Use of shares in subsidiary companies
   3. Loss of rights on leaving employment
   4. Other restrictions on shares
   5. Financial assistance
   6. Take-overs

9. Valuing unlisted shares

   1. Earnings based valuation
   2. Adjustments to the price earnings ratio
   3. Alternative methods of valuation
   4. Obtaining agreed valuation

10. Implementing a share plan

    1. Approval by HM Revenue & Customs
    2. Adapting foreign schemes
    3. Employee communication
    4. Securities regulations

11. Administering a share plan

    1. Reporting requirements
    2. Accounting requirements

12. Plan design: summary checklist

13. Glossary

14. Contacts

Jump to: Contents Page Chapter 1: Introduction Chapter 2: Choosing the right scheme Chapter 3: Taxation of employee share schemes Chapter 4: All employee share ownership Chapter 5: Share purchase by employees Chapter 6: Targetted incentives for key employees Chapter 7: Employee benefit trusts Chapter 8: Share capital considerations Chapter 9: Valuing unlisted shares Chapter 10: Implementing a share plan Chapter 11: Administering a share plan Chapter 12: Plan design - summary checklist Glossary Contacts