Record number of employers offering approved share schemes

A record 12,500 UK organisations operated at least one of the four tax-advantaged government share schemes last year, according to the Employee Share Ownership Centre’s (Esop) annual analysis of statistics from HM Revenue and Customs (HMRC).

The report, Employee share schemes statistics for 2009-10, published by HMRC on 30 June, showed that some of the four government-approved schemes, which include sharesave, share incentive plans (Sip), company share option plans (Csop), and enterprise management incentives (EMI), are in decline.

Of these schemes, only EMI fared better than the previous year. HMRC reported that 10,610 organisations operated an EMI scheme in 2009-10, an increase of 110 on 2008-09.

Malcolm Hurlston, chairman of Esop, said: “EMI is inexpensive to the public purse as, on the whole, if an organisation offering such a plan does well the extra tax revenue generated covers the relief given.

“The government can do more to promote the scheme with better liaison between the Treasury and business. It seemingly answers the coalition’s prayers as a cheap way to encourage growth in the [small and medium-sized enterprises] sector.”

The number of employees to whom options were granted under the all-employee sharesave increased by 120,000 staff, nearly 20%. This is despite 70 fewer organisations operating such a plan.

Hurlston said: “When these options were being offered, share prices would have been depressed. The 20% discount available on the option price meant that there were attractive offers there for the taking.

“On top of that, this reflects the trend of increasing personal savings as a reaction to the recession. Sharesave is risk free because, if the share price falls, employees can opt to have their money back instead of taking up the option at the end of the three- or five-year savings contract.”

Use of the company share option plan (Csop) has fallen and is often unfavourably compared to EMI as an either/or choice for directors. At its peak, 415,000 employees benefited from a Csop, †compared to just 40,000 last year.

Hurlston said: “Organisations that are asking staff to go part-time to balance the books could soften the blow by offering options using a Csop. That way, when the organisation recovers, those members of staff have something to show for their forbearance.

“Although Sports Direct chose a different approach, the £40,000 plus bonus won by its staff shows how option-based awards can transform performance and spread capital wealth. Negotiators have missed a trick by not asking for a Csop.”

According to HMRC, 860 organisations offered a share incentive plan (Sip) last year, 30 fewer organisations than the previous year.

Hurlston said: “Organisations could have cut and run in droves to help balance the books but the evidence shows they have not.

“This gives power to Esop’s case that share schemes add value to the employer that can not be measured in numbers alone.”

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