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Incentivising your staff - are share options the way forward


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By Natalie Wright

Are your employees facing a salary freeze/reduced bonus entitlement this year?  If so, do you have a share option scheme in place that could be used as an alternative to incentivise/reward employees or have you thought about putting one in place?

A majority of UK listed companies offer employees participation in share plans as part of their remuneration package.  This is less so in private companies and interestingly, the main reason given is simply that they either havenít thought about it, or they have, but consider that it would be too expensive or complicated to put in place.   However this may not necessarily be the case.

The Enterprise Management Incentive (EMI) Scheme is a flexible scheme with relatively minimal regulatory requirements compared to "Revenue-approved" share schemes.  The EMI scheme is normally used for key management employees in smaller to medium-sized (and possibly higher risk) companies that are aiming for substantial capital growth.  If the strategy of a business is a future trade sale or some other form of exit, then share options, if structured in the right way, usually attract very favourable tax treatment for both the employee and the employer.  

Most employers are facing challenges this year but it is also important to focus beyond this time.  When funds are tight, and company values are low, it is a perfect time to consider share options as a way to recruit and retain talented and valuable employees.

We can help you identify which type of scheme is best for your business as one size does not fit all.   In some cases, you may need a full share option scheme put in place, and in others, it could be as simple as a one-off document.  Please feel free to contact the Corporate Department if you think you might benefit from a preliminary discussion on the various options available.

© Davenport Lyons 2009. All rights reserved.

This document reflects the law and practice as at March 2009. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

About the Author

Davenport Lyons [] is an international business law firm based in the West End of London. The firm has an excellent reputation in areas spanning corporate to property, defamation to intellectual property, music to film finance and digital rights to sport.

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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Employee Articles

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