A well-established, tax-advantaged share option scheme (sometimes referred to as a plan), an Enterprise Management Incentive (EMI) plan that is tailored to the unique needs of your business can help retain and incentivise the key people integral to the future success of the company.
An EMI is often also a helpful recruitment tool, as talented individuals can be attracted to organisations that offer the scheme as an additional incentive over and above salary and more standard incentives.
As a share option plan, the EMI offers selected participants (frequently, your key personnel) the opportunity to purchase shares at a specified time and at a price agreed at the time the options are granted.
When tailoring the scheme to the needs of the business, individual performance and retention conditions can be built in, to help ensure rewards are only distributed when important corporate objectives have been met.
Any full-time employee of a qualifying company may be granted tax-advantaged share options over shares with a market value of up to £250,000 at the time of the grant, subject to an overall company limit of £3 million. The shares must be in an independent trading company that has gross assets of no more than £30 million and with fewer than 250 employees.
The Enterprise Management Incentive (EMI) is the most flexible, generous and tax advantaged share option scheme available in the UK, offering a potential tax rate of as low as 10% on any gains.
Since the EMI plan was introduced in 2000, the experienced RM2 team has worked with organisations of different sizes and varying complexities across all sectors to design and implement these schemes, helping to:
- Motivate participants to work beyond short-term goals.
- Reward participants on a tax-advantaged basis (including the application of Business Asset Disposal Relief on the sale of the shares).
- Protect current shareholders from immediate dilution and loss of control.
- Promote long-term retention of key employees.
- Encourage company growth by linking awards to performance conditions.
- Provide a framework to include new participants, if required.
- Attract and recruit talented candidates to companies.
- Minimise financial risk for participants.
To join an EMI scheme, the employee must:
- Be an employee of your company or a subsidiary of your company.
- Work for you for at least 25 hours a week or 75% of their working time (therefore, a part-time employee can qualify so long as they don’t spend more than 25% of their time working elsewhere).
- Not hold any more than 30% of the company’s shares at the time the options are granted.
At RM2 we believe in adopting a consultative approach to building share plans. We work closely with clients to understand precisely what they intend to achieve with their EMI scheme.
For more than two decades this approach has ensured we deliver an effective service that helps our clients meet their defined corporate objectives, whilst helping shape their future growth strategy.