Employee share schemes: positioning for growth

Posted by admin at 15:51 on 13 Feb 2017

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In a new article, Liz Hunter, explains why employers need to re-examine the balance between cash and equity in their staff remuneration strategy.

Drawing on the example of the ill-fated Appollo 13 mission, Liz reflects on the daunting challenge facing many companies in the current environment to complete their mission and bring home rewards for shareholders.

For most businesses their greatest resource is their people. Yet big changes to income tax, NICs and allowances will soon take effect, raising the cost of employment. And the picture could get worse as politicians struggle to deal with an unprecedented budget deficit and face calls for yet more increases in payroll and social security taxes.

Some companies will contemplate triming employee benefits or even making redundancies, but Liz suggests that they should consider the alternatives. Salary sacrifice and flexible benefits will be worth exploring in many cases and share based incentives are certainly a very attractive proposition. The right equity incentive plan will enable employees to acquire shares in their employer company, either now or in the future (by way of an employee share option or share ownership scheme), and to enjoy the gains at much lower rates than would apply to salary or cash bonuses.

At a time when the value of many businesses is suppressed due to unfavourable trading conditions, now could be an ideal time to introduce employee share option and share ownership schemes. A relative low base for share values creates ideal conditions for maximising the future value of employee incentives such as the Enterprise Management Incentive (EMI) and Share Incentive Plan (SIP).

You can see the whole of Liz Hunter's article here: employee share schemes, positioning for growth. If you would like to ask about any of the issues raised, why not contact us now on 020 8949 5522 or get in contact with Liz direct at Liz.Hunter@rm2.co.uk.