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The current economic climate has been hard on many of us - individuals and businesses alike.
We have found that a number of our clients are experiencing the same dilemma: their staff have worked exceptionally hard over the last couple of years without a bonus or pay rise and now that the economy is starting to show signs of recovery those staff would like to see some reward. However, many employers will still feel unable to offer increased pay or bonuses, so how else can they reward and motivate staff?
One answer is to offer options to acquire shares at a future date or on the occurrence of a specific event. For example, you might offer staff options to acquire shares conditional on the sale of the company or grade the shares so that the more money you get for your company, the more shares the staff will get. This should motivate staff to work harder towards making the business attractive for sale, because their financial interests are linked.
Share schemes can be designed to suit every size or type of business. In certain circumstances they can also be made to operate in a tax-efficient manner using a type of HMRC approved scheme. There are schemes where you can give shares to staff, or you can allow staff to buy shares for less than market value. You can set personal targets as well as departmental or business targets to be met before exercisng options or acquiring shares. There are even "phantom" schemes which offer cash payments but based on the growth in value of the company's shares.
With such a wide range of schemes to choose from, the first step is to decide what your company's objectives are. Contact our corporate/tax team to discuss the best route for you.