Might EVA be making a comeback? Economic Value Added (EVA) was a popular financial measure in the 1990s, used by many major companies as well as investment analysts.  Interest in EVA has recently re-emerged as a result of the acquisition of EVA Dimensions by Institutional Shareholder Services (ISS) last year. EVA is defined as: EVA…

February 25, 2019 Read more >

Update on the changes announced in the Budget to the rules for entrepreneurs’ relief and their impact on employee incentives Introduction In the Autumn Budget, the Chancellor had announced that the definition of ‘personal company’ for the purposes of ‘entrepreneurs’ relief’ for capital gains tax purposes would be tightened so that, with effect from 29…

January 30, 2019 Read more >

Executive Director Pensions and Post-Employment Shareholding Our December e-news described the new Investment Association (IA) Remuneration Principles published on 22 November 2018.  On 23 January 2019, the IA announced the specific approaches which IVIS will take at AGMs in 2019 on two of its new requirements: Executive Director Pensions and Post-Employment Shareholding Periods.  These apply…

January 24, 2019 Read more >

Valuation of share-based remuneration:  importance of underlying assumptions There are particular circumstances when a company needs to calculate a fair value of share options or performance share awards.  As the majority of performance shares in the UK are structured as nil-cost options this article refers throughout to options only. The most common circumstances are: 1.…

November 27, 2018 Read more >

Changes announced in the Budget to the rules for entrepreneurs’ relief Introduction While there had been concerns whether entrepreneurs’ relief (which reduces the rate of capital gains tax for higher and additional rate taxpayers from 20% to 10% on the first £10 million of an individual’s qualifying lifetime gains) would be significantly reduced, or even…

November 26, 2018 Read more >

Changes announced in the Budget to the rules for entrepreneurs’ relief and their impact on employee incentives Entrepreneurs’ relief reduces the rate of capital gains tax from 20% to 10% on the first £10 million of an individual’s qualifying lifetime gains. It is available on the disposal of shares in a trading company (or shares…

October 30, 2018 Read more >

In last month’s newsletter, we explained why the Inclusive Ownership Fund (IOF), proposed in the September 2018 Labour Party Conference, may not be the best method of enabling workers to share in the wealth they create.  We agree wholeheartedly that employee ownership can help increase a company’s productivity and encourage employees to identify more closely…

October 23, 2018 Read more >

Value Creation Plans – genuine attempts at designing executive LTIPs or too complex to explain? Some years ago, I attended the AGM of one of the UK’s biggest supermarkets. A shareholder asked a question about the proposed new executive LTIP. After a pause, one of the non-executives stood up and replied “it is too complex…

October 23, 2018 Read more >

How do not-for-profits design their long-term incentives? MM&K investigated the LTIP policies for 59 of the largest not-for-profit organisations to answer this question. Our sample consists of Charities, Housing Associations, Co-operatives, Building Societies, Mutual Insurance companies and Education Establishments (Universities and College Groups). It is important to note that the vast majority of these organisations…

October 18, 2018 Read more >

When is an employees’ share scheme not an employees’ share scheme? The answer is: when it’s an Inclusive Ownership Fund (IOF). Few would disagree that an engaged workforce delivers greater productivity or that offering shares to employees creates direct engagement with the financial and economic performance of the business. But proposals announced at the Labour…

September 27, 2018 Read more >

Malus and LTIP awards The UK Corporate Governance Code states that long-term incentive plans (LTIPs) must include provisions to enable the company to withhold payments to participants in specified circumstances. It is now common for LTIP Rules to allow the Remuneration Committee to apply these ‘malus’ provisions and also to ‘claw back’ the benefit of…

June 5, 2018 Read more >

Share plan annual returns deadline Annual share plan returns for the tax year ended 5 April 2018 must be submitted online to HMRC no later than 6 July 2018. Returns must be made for the tax-advantaged share plans – SIP, SAYE, CSOP and EMI – and also for unapproved share plans. Items to be reported…

June 1, 2018 Read more >