Employee Incentive Plans (UK)

Fiduchi has helped employers establish and operate employee incentive plans for many years. From design to the establishment and administration of plans, we have the expertise you need.

How Fiduchi can help with your employee incentive plan

Our client focussed service approach helps to deliver successful results. Our goal is to provide a personalised, flexible service. Our partners and us begin by working closely with you to define your needs, and then adapt our processes wherever possible to provide the best support and solutions for your organisation and employees. We work closely with relevant professional advisors including tax specialists, lawyers and remuneration specialists to support the establishment and operation of share plans of all kinds.

Our services include:

Online plan administration;
Employee communications (including online access to award information, etc);
Record keeping;
Tax reporting;
Company secretarial and other regulatory formalities;
Employee benefit trust formation and management services;
Dealing in shares.

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What are employee incentive plans?

Employee incentive plans have evolved to take many forms. In western countries, employers commonly award shares in the employing company as a means of incentivising employees to grow the value of the business while saving cash costs. But this may not be appropriate for every employer, particularly in countries where local customs, laws and business practice have led to preferences for other types of plan. These include “phantom” share plans, cash bonus plans, savings plans and pension plans, “flexible benefit” plans, etc.

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Key benefits of employee share plan

Giving employees a stake in the business can provide a range of benefits to a company and its owners:

It can help attract key employees who may expect such benefits particularly if they have enjoyed them in other companies.
It can motivate employees to help grow the business and therefore the value of their stake in it.
It can encourage loyalty by causing those who resign during any chosen “vesting” period to lose their accumulated share rights.
By encouraging employees’ contribution to growth and giving them potential for realising value when they sell the shares, it eases pressure on immediate cash costs in salaries, bonuses, etc.
These benefits are made even more attractive by lower tax rates charged on capital gains compared with cash earnings.
Particularly in private companies, share plans can give business owners a means of realising part or all of their investment in the business without selling to outside investors, and of doing so at favourable tax rates.

What you need to consider when designing your employee plan

In choosing the type(s) of plan to be offered a range of design choices should be considered to ensure that it meets the needs of the particular business, its owners and employees:

What proportion of the share capital of the company is to be allocated to the plan and should its value be allocated among the participants?
How will the shares be funded – will they be existing shares purchased from (or gifted by) current shareholders or will they be newly issued?
Should shares be given to employees at the outset or should options be granted to acquire them later?
How will employees realise the value of their shares in due course? In a quoted company the shares can normally be sold in the market but in a private company, will the sale be dependent on the company itself being sold or floated, or will the controlling shareholders buy the shares, or should the company establish and fund an “internal” market such as an employee benefit trust to act as a market and warehouse for shares?
Should awards be made only to one or more members of the senior management (this more likely in smaller companies) or would an “all employee” plan be suitable (more likely in larger companies once the senior management have been catered for)?
Should employees’ share awards include rights only to sale proceeds in due course, or also to voting rights and/or dividend rights, or some combination of these?
Should vesting conditions be attached so as to encourage loyalty by causing those who leave to join competitors, etc during a vesting period (say for three to five years) to lose the value of their accumulated share rights on leaving? Should “good” leavers (who leave on retirement, or by reason of redundancy, ill health, etc) be entitled to enjoy some or all of the value accumulated in their shares?
Should a special class of share be created for use in the plan, for example “growth shares” whose rights to participate in any capital value is limited to any such value created above a current “hurdle” level corresponding to the current value of the company? This may ensure that the shares have minimal value at the time of award but may acquire disproportionately higher value if the value of the company grows.
How should the benefits of the plan be communicated to the target population, so as to ensure that the value on offer is fully appreciated?

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Types of employee share plans

Commercial practice and the tax system have developed a wide range of types of employee share planss, each created to meet particular needs depending on the size of the company, the nature of its business and the population of employees to be invited to participate including:

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Enterprise Management Incentive (EMI) Share Option Plans

A tax advantaged plan intended mainly for selected employees in smaller trading companies (with up to 250 employees and gross assets of up to £30m). Find out more >

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Company Share Option Plans (CSOPs)

A tax advantaged plan mainly for selected employees in larger companies and in others who do not qualify for Enterprise Management Incentive plans. Find out more >

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Share Incentive Plans (SIPs)

This is a tax advantaged 'all employee' plan under which shares can be awarded annually to all staff or only to those who are prepared to invest some of their earnings in the plan. Find out more >

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'Save-As-You-Earn' (SAYE) Share Option Plans

A tax advantaged plan allowing employees to save from their earnings and apply the savings in exercising share options over a 3, 5 or 7 year period. Find out more >

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Long Term Incentive Plans (LTIPs), Performance Share Plans, Restricted Share Plans and others

A range of “unapproved” plans which arise in practice to meet commercial needs.

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Employee Ownership Trusts (EOTs)

This is another tax advantaged arrangement which allows the existing owners of the company to sell a controlling shareholding to a specially designed trust free of tax. The trust must meet certain requirements designed to ensure that the company is owned and controlled for the benefit of the employees as a whole. Find out more >

Easy Onboarding

Onboarding of your data to our online platform is easy regardless if you choose a fully-managed or self-service in-house solution. By making the switch to our platform, you can upgrade from having to manage your share plan data on complicated spreadsheets. Plus to make the process as simple as possible, our experts will guide you every step of the way and we also provide helpful guides.

Global Compliance

For businesses who opt for our fully managed solution, our platform is able to deal with each business's unique requirements. When it comes to dealing with exact legal and regulatory issues, our platform will be able to automatically determine the actions required for each award or vesting, specific to the country in which the company operates. Therefore minimising the risks and allowing full compliance from a legal and regulatory position.

Data Security

Our platform uses the highest standards to protect the valuable data and assets we hold on behalf of our clients. We have a team of in-house cyber security and IT professionals to protect our system and carry out security audits, due diligence, penetration testing and to oversee potential threats. We are fully regulated, accredited and certified by a range of statutory and non-statutory bodies including the US Department of Commerce’s Privacy Shield.

Branded User Portal

Our platform can be branded to match your company's own brand, therefore becoming a professional extension of your employee benefits. You can set role-based access and let your employees and shareholders log into their own online branded share platform anytime, anywhere and see exactly what shares they have and how much they are worth. They can also easily accept grants, exercise options, calculate potential payouts and more.

Find out more - Call us >

Testimonials

"Thank you very much for your professional assistance (and patience) in helping us transfer our shares and assets into the new Trust. I know that it has taken longer than expected. Still, your professionalism and continued support have helped us achieve the desired outcome."

Chairman and CEO

"My sincere thanks for the assistance you have provided the advisory committee by coordinating directly with the charity to formalise an agreed donation plan."

Private Client (Charity)

"Many, many thanks for your hard work and speed at setting up our client's Private Investment Company in just 24hrs! Your flexibility and communication throughout the whole process have been appreciated, and the feedback has been tremendous......

Thank you."

Major UK Law Firm

"Thank you, everyone, for delivering this significant re-structure to our family assets and within a very tight timeframe.

Great to get this finalised!"

Mr. C - Private Client

"We consider Fiduchi an important strategic partner of ours. Over the years they have proven themselves to be professional and extremely thorough. Combined with this professionalism, they are always a pleasure to deal with and we are pleased with their service levels."

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Mr. P.E, Managing Director, W Ltd.

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Mr. P.E, Managing Director, W Ltd.

“I am very impressed with the professionalism and efficiency Fiduchi Limited demonstrated during the establishment of our employee benefit trust. They coordinated the process seamlessly and provided us with valuable advice and guidance to ensure compliance with our regulatory and legal responsibilities. Throughout my engagement with the team, I have found them to be approachable and easy to work with.”

Mr. P.B. FE Ltd.

"Thank you for helping us with the establishment of our real estate fund."

Startup Fund Manager

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