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Employee incentive schemes: 3 trends driving change

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Employee incentive schemes: 3 trends driving change

Client Director, Paul Jeanne highlights key trends that have emerged within the employee incentive space following the implications of the Covid-19 pandemic.

For many employers the prolonged period of disruption as a result of Covid-19 has reiterated the value of an engaged and productive workforce. From our conversations with clients with existing employee incentive arrangements over the past few months, discussions around cashflows, share plans and the revision of hedging strategies have come to the fore. 

  • Cashflow management

    Some companies used to wait until vesting to decide how they were going to source shares for their employee share plans. Covid-19 has demonstrated that this strategy cannot always be relied on if cashflow and market liquidity are impacted by external factors. It is therefore important to consider appropriate hedging strategies with your employee benefit trust (EBT) trustee.

  • Revision of hedging strategies

    Many clients were thinking of introducing hedging strategies pre-pandemic, enabling them to deliver shares under their various plans and therefore utilise their EBT. However, implications of the pandemic such as market uncertainty and some companies having more time to consider these strategies, have catalysed and in some instances accelerated decision making around the introduction of such plans.

  • Share certificates/corporate nominees

    The dramatic global economic downturn in March and the precarious nature of the current macroeconomic environment has led to many employees keeping hold of shares post-vesting.

    Working from home has also meant that normal postal service has been disrupted. This has had an adverse effect on the delivery of share certificates to share plan participants and to brokers for trading. Many companies are therefore accelerating their transition from inefficient paper-based practices to more immediate electronic solutions for share plan activity and record keeping. This was a growing trend prior to the pandemic and an aspect we feel strongly about at Ocorian. We utilise share plan portals and offer integrated corporate nominee facilities to ensure share plans and shareholding can be readily managed online.

Structured for success

Effective employee incentive arrangements provide flexible, tax-neutral structures to reward, retain and incentivise key employees, resulting in a committed workforce intent on seeing the company perform well. 

We work closely with our clients to provide efficient employee incentive solutions tailored to their unique needs, ensuring that the share plans are appropriately stocked to be able to deliver the full benefit to the employees. Our in-house legal function works with our administration teams so that we can quickly and effectively review and act on proposals, both when taking on structures and also during major and time-critical events such as the current pandemic.

Get in touch via my profile below to discuss how we could support your employee incentive arrangements.

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