Share options, gifts of shares or share purchase plans
Once the objectives are clear, decide the structure of your employee incentives. There are three main types of employee share scheme:
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A share option is the right to purchase shares in the future at a predetermined price. It is risk free until the shares are bought.
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A gift of shares confers immediate shareholder status. To minimise upfront tax, the shares may be held in an employee benefit trust and/or made contingent on the achievement of performance or loyalty conditions.
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Employee share purchase schemes. The participant is asked to make a financial commitment as well as potentially share in the company’s success.
Key share scheme design considerations
There are several Government sponsored employee share option and employee share ownership schemes available such as the Enterprise Management Incentive share option scheme and the Share Incentive Plan. These can offer major tax savings to both employers and employees. Whether you are eligible will depend on a variety of factors including:
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whether you are an independent company
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your size and structure
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your activities
Company share schemes are available for every size and type of company. For free, impartial advice call us now on 020 949 5522 or email us on mail@rm2.co.uk. You can also download free share scheme factsheets here or order a free copy of “Employee Share Schemes – A Guide for Directors”.
