For National Share Scheme Day, May 22, we raise awareness of the empowering nature of employee share schemes.

Share schemes give individuals the opportunity to create potentially life-changing wealth, while also accelerating growth, stabilising companies, and boosting the fortunes of the nation. So, here’s what you need to know about them…

What is a share scheme?

A share scheme, also known as an employee share ownership plan (ESOP) or equity compensation plan, is a program that allows employees to acquire shares in the company they work for. These schemes are designed to align the interests of employees and shareholders by giving employees a direct stake in the company’s success.

Share schemes are powerful tools for companies to attract, retain, and motivate employees. They can also foster a culture of ownership and shared success, which can lead to enhanced performance and loyalty.

What are some of the types of share schemes?

Share Options: Employees are given the option to buy shares at a fixed price at a future date. If the company’s share price increases, employees can purchase the shares at the lower price, potentially realizing a profit.

Share Incentive Plans (SIPs): Employees are given shares as part of their compensation package, which may be free or offered at a discount.

Employee Stock Purchase Plans (ESPPs): Employees can purchase company shares at a discounted price, often through payroll deductions over a set period.

Restricted Stock Units (RSUs): Shares are awarded to employees but are subject to vesting conditions, such as staying with the company for a certain period.

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What are some of the benefits of share schemes for employees?

Firstly, financial reward. There’s exciting potential for financial gain if the company’s share price increases. This provides an additional form of compensation, enhancing an individual’s overall remuneration.

Share schemes create a sense of ownership and investment in the company’s success. Employees may feel more motivated and engaged, knowing their efforts directly impact their financial returns.

They can also be an additional method of saving for retirement, especially if shares are held long-term.

Loyalty becomes more of a focus, too. Vesting periods and share options can encourage employees to stay with the company longer, reducing turnover, and enhancing company culture.

What are the benefits for employers?

Enhanced performance is a key benefit for employers. By aligning the interests of employees with those of shareholders, there’s the potential for increased productivity and performance.

Attraction and retention is another major plus. Share schemes can make the company more attractive to top talent and helps retain key employees.

Also, cost management — these can be a much more cost-effective way to reward employees compared to cash bonuses.

According to research by Vestd, a share scheme and equity management platform for UK startups, scaleups and SMEs, 93% of company leaders say their share scheme helped their company grow, while 95% say shares improve employee loyalty.

What’s more, many share schemes have tax incentives and to date, £480,000,000’s worth of Income Tax has been saved by British companies with schemes in place. Vestd says that for every 100,000 companies that have a scheme, we can add £1bn to the economy.

Fintech is transforming the financial sector with the capacity to deliver many benefits across society, having grown rapidly in recent years due to advances in technology and changing customer expectations. Innovation in products and services along with digital advancements have improved financial inclusion, allowing people, regardless of their socioeconomic or professional background, to access key financial benefits ranging from professional advice, savings, insurance, to open and online banking. ​

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The Future of Work: People, Culture and Tech

For business and individuals to thrive it is critical for leaders and their HR professionals to be able to understand what the future of work might look like for individuals and the organisations where they work. Whether in an SME, a start-up or a multi-national business, HR professionals are key changemakers on any organisation.

Having a perspective on how workforces and workplaces can prepare for changes that are inevitable will enable HR leaders and their teams to cultivate success. ITN Business will showcase how HR professionals can stay ahead of the curve and adapt to the latest developments across the employment field, in ‘The Future of Work: People, Culture and Tech‘.

 

Our finance programme, The Future of Finance: Building a Better Tomorrow will focus on the positive impact FinTech is making in society, looking at financial education for the next generation, sustainable transactions and encouraging the next generation into the industry. Presented by Nadira Tudor in ITN’s London studio, the programme will launch at Innovate Finance’s FinTech as a Force for Good Conference, 7-8 October 2024.

There are commercial opportunities for leading organisations to be featured in the programme and spearhead their own news item. If your organisation wants to share what you stand for and be part of this important conversation, please contact ITN Business’ Head Programming Director James Linden or Programming Director Charlotte Lenman.