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How does a Share Plan work?

Transcript: How does a Share Plan work?

Let’s begin by taking a really simple example:

  • Think of a company as a cake. As the sole shareholder, you own all of that ‘cake’, and would like for its value to increase
  • Aproportion of the company’s share capital is allocated for employee awards – usually referred to as a ‘share pool’
  • By implementing an employee share plan, you are effectively awarding a slice of the ‘cake’ to your employees
  • They are  therefore motivated to grow the value of the ‘cake’ and consequently their own individual reward
  • This in turn grows the value of the entire company and increases the value of all shareholder interests.

You decide:

  • Who is to receive shares
  • On what condition shares become available
  • Will employee shares have voting rights?
  • At what cost will employees attain shares?
  • Will employees get shares or share options?
  • Will employees forfeit rights/shares if they leave?You do not need to have all the answers now as we can help guide you through these during the plan design

Share Scheme Categories

Schemes are broadly split into 3 categories, and are suitable for different businesses, and for different reasons:


Right to buy in the future, no risk but no dividends or voting rights.


Payment upfront or can be deferred to make affordable.


Shares given, tax paid on value.

How we can help

We are a dedicated team of share plan specialists, with:

  • Expertise to advise on plan design, implementation, communication, and administration, typically for a fixed fee
  • A record of having implemented over 700 plans successfully
  • ISO9001 accreditation

For more information on share plans, visit our resources section or contact us on 020 8949 5522 / enquiries@rm2.co.uk.


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