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Article:

Incentive plans for listed companies

26 June 2019

Listed companies and groups will operate a range of incentive schemes on top of the salary and benefits that they pay to their staff. Traditionally this would take the form of a short or medium-term cash bonus scheme and a long-term incentive that delivers shares in the listed parent. In practice, the nature of a listed company’s incentive schemes will vary significantly depending on the company’s circumstances and aims. BDO advises many listed companies on all areas of their incentive schemes.  

Listed companies will often have a discretionary share scheme that is focussed on the more senior employees. If smaller listed companies meet the relevant conditions, this may be structured as an Enterprise Management Incentive share option plan but otherwise it will commonly be a Company Share Option Plan structured alongside a non-tax-advantaged share option plan. For faster growth more entrepreneurial listed companies, a Joint Share Ownership or growth share plan may give a more tax efficient alternative.

Listed companies may also operate an ‘all-employee’ share plan to allow participation in the company’s equity for essentially all of the company’s employees. The are two main all-employee share plans that are tax-advantaged in the UK:  the Save as You Earn scheme and the Share Incentive Plan

BDO’s advice on incentive schemes for listed companies incorporates all areas of design, implementation and operation. We help our listed clients ensure that their incentives reflect the culture of the business and help to drive corporate strategy with the appropriate tax treatment for the participants and the employing company. We advise companies who are implementing arrangements as part of an initial public offering (IPO) and those who are already listed but are reviewing their incentives. We also advise listed companies on an ongoing basis on the operation and maintenance of their schemes.

Our incentive advice to listed companies includes the following:

  • Investor guidelines and best practice
  • Benchmarking against comparator peer groups
  • Corporate governance and regulatory requirements and restrictions 
  • Accounting implications
  • Design of effective performance conditions
  • Tax implications globally for the company and the participants
  • Process mapping to ensure the efficient operation of the grant, vest and exercise process
  • Design and implementation of the incentive schemes including preparation of scheme documentation
  • Assistance with HMRC reporting obligations.

For help and advice on creating the right incentive plan to help your business grow, please contact Andy Goodman or Matthew Emms.

Read more on Share plans and incentives