EMPLOYEE SHARE SCHEMES
Stock ownership plans no longer confined to "corporate suites"
As companies around the world battle to secure the best talent, US-style compensation packages replete with stock ownership programmes are becoming ever more widespread. That’s what human resource consultancy Towers Perrin says in its latest annual remuneration study.
The 26-country report found that the use of stock as a compensation tool is no longer largely confined to senior executives — it has begun to permeate further down through the organisation hierarchy to the ranks of managers and employees at companies both large and small.
But as Towers Perrin acknowledges: "Stock ownership programmes to reward employees are far from universal, nor are they risk-free."
Spreading around the world
Figures gathered by Towers Perrin suggest that in the US more than 11 million employees are now covered by stock plans, and stock options are by far the most common type of long-term incentive (LTI), especially for senior management.
"In Asia-Pacific, Europe and Latin America, stock ownership programmes are also catching on, albeit without the same fervour as in the US."
European companies plan to step up their use of stock ownership plans in the next three years. The trend toward increased use of variable incentive pay and stock compensation programmes is also evident in Asia-Pacific and Latin America.
Says Towers Perrin: "Time and again, we’ve seen that as employees take on more responsibility for contributing to bottom-line results, they want to share in those results."
A final word
"Stock ownership programmes are not a panacea for success. They are one type of reward mechanism that must be carefully considered and, if implemented, done so thoughtfully within the context of an organisation’s total rewards strategy and overall business. However, when stock programmes, together with other variable incentive compensation programme, are deployed under the right conditions, they can be a highly effective way to engage and motivate employees." — Towers Perrin.
Want to know more?
Title: Worldwide total remuneration 2000, Towers Perrin.
Availability: Extracts from the report are available online, free of charge, at the Towers Perrin's web site . . . www.towersperrin.com/towers/wtr00/english.html