What was the client's situation?
8 Northumberland was established in 2009 and operates of the largest central London venues right next to Trafalgar Square, catering for a variety of events from weddings to awards night, for up to 1,000 guests.
Inspired by the John Lewis model, the main shareholder was keen to reward all of his employees with a stake in the company which would enable participants to share in dividends from their shareholdings and potentially a share in the value of the business if it was ever sold. The plan needed to take into account the fact that many staff were junior, operating often on a part-time basis, because of the seasonal nature of the work. this is also affected employees' ability to commit financially to any plan. In addition, it was important that some differential was available to take account of loyalty and seniority, if possible.
Why was the client eligible for the specific share plan?
RM2 recommend a Share Incentive Plan (SIP) on the following grounds:
- Must involve all the employees - but allows certain differentiation based on years' service and hours worked
- Allows employees to be given shares fee, and without a tax charge, ensuring that lower earners were not excluded
- Participants become indirect shareholders (shares are held on their behalf in a special trust) and thus can benefit from dividend payments, or can choose to reinvest dividends in more shares in the company
- Participants can be required to sell their shares back if they cease employment
What did RM2 do to help?
RM2 advised the company on the establishment of a SIP using Free Share awards for all employees. We assisted in providing a points-based system whereby appropriate numbers of Free Shares were awarded on the basis of years' service and hours worked. We supported the company at the launch of the plan with information for employees, a face-to-face presentation to all staff and question and answer session to deal with individuals' particular queries.
What difference did RM2 make to you and the business?
It would have been impossible for us to set up a scheme like this without professional support. Without doubt the RM2 team was highly professional and capable, working hard for us finding the best most affordable and practical solutions.
Were you happy with how RM2 helped you with the project?
Whenever I needed to ask probably dumb questions or the way we ideally wanted to work was in conflict to the rules, alternatives were founded and were delivered in a palatable manner, i.e. they managed to tell me (the client) what I didn't want to hear.
Would you recommend RM2?
Without hesitation I would instantly recommend RM2. I still to this day manage to throw odd spanner at the or ask questions I have asked 10 times before and they continue to manage the Plan and my expectations professionally and pleasantly. It's a fact that people buy people - these people are worth investing in.
Were there any negatives?
Setting up and maintaining the scheme is expensive; as it slowly matures the fee becomes better value at the start it felt very expensive. I have checked RM2's fees with several other suppliers for this service and they came out on top each time.
There were a couple of surprises along the way - in particular some staff were quite sceptical at the outset. However, we have paid the first dividend, the second set of shares have been awarded and the employees are starting to take much more interest in the company. We are committed to staff ownership and are confident of the rewards that will follow.