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Contact: Sean Quill
Tel: +353 (0)1 603 9700

Designing and delivering employee share ownership schemes

Many companies offer share schemes as a significant part of their total rewards program. Shares are viewed as a way to motivate and retain senior executives or high performers, and to give employees at all levels the opportunity to share in the success that they help to achieve. Employees therefore need a thorough understanding of the risks and rewards of share ownership.
  

Research shows that companies with high employee share ownership outperform those without – indicating that the right scheme can contribute to greater business success. After evaluating several studies, the National Center for Employee Ownership in the US concluded that, “The combination of employee ownership and participative management is a powerful competitive tool.”

Through effective communication of share schemes, firms can create ownership behaviours, with a consequent positive impact on company performance. But, in a competitive world, any scheme must fit with the overall compensation and benefits structure if it is to contribute effectively to the achievement of corporate goals.

A well-designed share scheme can:

• Encourage employee commitment
• Motivate employees in line with organisational goals
• Support the integration of local operations into a single global organisation
• Offer a cost effective means of remuneration
• Assist in recruiting and retaining employees
• Create tax efficiencies for employees

Our Services include:

The right scheme, properly communicated, can have a positive impact on company performance. A number of different schemes are available

Approved share schemes

• Share Participation Schemes/Approved Profit Sharing Schemes (APSS)
• Savings Related Share Option Schemes
• Save As You Earn Schemes (SAYE)
• Approved Share Option Schemes
• Employee Share Ownership Plans (ESOP)
• Share Clog Schemes

Unapproved share schemes

• Share Purchase Plans (SPP)
• Share Option Schemes
• Restricted Share Schemes

Designing share schemes

Several factors may impact on the type of scheme suitable for an organisation. These include:

• the structure of the organisation –quoted Irish company, multinational subsidiary or private company.
• does the parent company offer an all-employee share scheme or have a global policy on such schemes?
• is the organisation in a position to make shares or share options available?
• does the organisation pay employee bonuses?
• are bonus payments performance-driven?

Mercer assist in designing the most suitable scheme for your organisation.

Producing documentation

Once the scheme has been designed, Mercer can provide the tax and legal experience to draft scheme rules, employee booklets and ancillary documentation. Mercer can draft the trust deed where there is a requirement to establish the scheme under trust.

Liaising with the Revenue Commissioners

Where necessary, Mercer will negotiate with the Revenue Commissioners to secure initial approval or amendments to the scheme.

Communicating to employees

Mercer helps organisations build shareholder literacy among employees. We can help to develop a strategy to introduce or reinforce the value of share ownership in the context of total rewards.

Mercer develop materials for employees, including a brochure describing the scheme, aimed at increasing employee understanding about the potential value, as well as the risks, of stock ownership.

Administration

Mercer provides a full and comprehensive administration service for approved share participation (profit sharing) schemes in Ireland.

Our administration service allows companies to enhance the value and benefit of their share plan whilst helping employees access and understand the value of their company share plan and their shareholdings.

Our expertise covers all aspects of administration including

• Internet access to participants
• Revenue returns
• Share purchases and appropriations
• Dividends
• Share sales and transfers
• Corporate restructure
• Dealing with company and participant queries

In addition mercer provides online access to participants.  Mercer also liaise with the US Revenue (IRS) in respect of all US share plans, we ensure that the necessary paperwork is completed by participants and we file the mandatory IRS tax returns.

With over 25 years experience in administrating profit share plans, Mercer are recognised experts in the field.  Let Mercer help your company success in providing first class service to you and your employees.
  

Monitoring developments

New legislation, Revenue regulations and practice may change over time. Mercer can update the scheme and keep both the organisation and employees informed through regular briefings and communications.

Many multinational companies have a global approach to employee share schemes. Mercer can review the key elements of this approach to determine whether there is a more tax-effective solution for Irish employees.

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Print this page

Contact: Sean Quill

Tel: +353 (0)1 603 9700