New guide to all-employee share schemes

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New guide to all-employee share schemes

The government boasts that its new share plan is the most tax favourable share scheme for all employees ever launched in the UK. Incomes Data Services has just published a detailed guide to all-employee share schemes which features eight examples of companies that have already implemented this new type of plan.

Three types of share

The all-employee share ownership plan (AESOP) was introduced in summer 2000 as part of the Labour government’ s commitment to advance the stakeholding society. It confers generous tax relief on employees, normally provided the shares are kept for five years.

Under the Inland Revenue regulations, employers are able to:

allocate up to £ 3,000 worth of free shares to employees a year
offer employees the chance to buy partnership shares worth £ 1,500 a year out of pre-tax pay
match the employee’ s investment by the allocation of up to two extra matching shares for each partnership share purchased.

Share awards linked to performance

Among the eight companies that IDS contacted which have already implemented the new AESOP, none has so far taken advantage of the opportunity to link the award of shares to an individual's work performance. But as IDS points out: The new plan is still in its infancy and it may take companies some time to adapt their existing performance management arrangements to the Inland Revenue criteria for awarding shares on this basis.

Only one of the organisations featured in the research incorporates all three types of share in its AESOP.

What you will find in the IDS research

This IDS report examines the four types of Inland Revenue-approved all-employee share schemes currently operating in the UK. Inland Revenue regulations for gaining approval are summarised for each of the four types of share scheme. The coverage also extends to the benefits and drawbacks of employee share ownership in general.

Contents of IDS Study

All-employee share ownership plans

Provides a detailed analysis of the plans already up and running in eight named companies, including:

content of plans
reasons why the organisations have adopted a particular type of design
costs involved in introducing an AESOP
communicating an AESOP.

Approved profit-sharing

Details of company practice in 11 named companies, including:

eligibility criteria for participation
distributing the profit pool
replacing approved profit-sharing (schemes will be phased out by 31 December 2002).

SAYE share option schemes

Details of company practice in 36 named companies, including:

eligibility criteria
participation rates
option pricing
average monthly amount saved by employees.

Approved company share option plans

Details of practice in seven named companies (where they operate as all-employee schemes), including:

information on latest grants
performance conditions
leaving the company before exercise.

Want to know more?

Incomes Data Services is an independent research organisation providing information and analysis on pay, conditions, pensions, employment law and personnel policy and practice in the UK and rest of Europe.

Title: All-employee share schemes , IDS Study 712, July 2001.

Availability: Contact the IDS customer services department in London, tel: 020 7324 2599, or email: ids@incomesdata.co.uk.

Subscription details: With your annual subscription you receive 24 issues a year, including four in the expanded StudyPlus format (includes directory of suppliers).

If you would like more details about this latest report, jump to . . .

www.incomesdata.co.uk/studies/sharescheme.htm

For a list of recent IDS Studies with abstracts, jump to . . . www.incomesdata.co.uk

Take a look at our reviews of previous IDS Studies: