Broad-based Share Plans – are they still fit-for-purpose?

July 19, 2022

On the 12th July, the ESOP Centre hosted a members’ webclave titled “Are Broad-Based Share Plans Still Fit For Purpose?”. The guest speakers covered a number of topics and issues affecting broad-based share plans today.

An employee share scheme is a powerful tool for employee retention and alignment of stakeholder interests. As employment practices are changing, share scheme practice should also change in line, to remain fit-for-purpose.

At the moment the whole world is facing “the great resignation” phenomenon – 40% of the world workforce is ready to quit (2021 Microsoft Work Index). The work/life balance is shifting. 39% of employees feel like they can be their authentic selves at work. 73% of the workforce want remote work to stay.

In June 2022, HMRC announced a review of the SAYE bonus rate mechanism. HMRC is conducting a review to determine if the current mechanism needs to be simplified. An update should be released before the end of summer.

One of the interesting take-aways from the discussion is an expansion of the range of eligible employees. A key benefit of the SAYE scheme is that it promotes retention and aligns stakeholders. However, it has been noted that some contract employees, who are not eligible to participate in SAYE scheme, have stayed with the company longer than some of its permanent employees.

Other take-aways from the discussion were: additional flexibility around good leaver provisions, introduction of an auto-enrolment mechanism, flexibility around option price reset if it’s underwater.

MM&K is a specialist adviser on employees’ share schemes. For more information, please contact Margarita Skripina.

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