Share Schemes supplement 2004: News

HBOS scoops hat full of awards
Edinburgh-based banking group HBOS has won a string of international awards for its share schemes.

Most recently it won ‘Best European all-employee share ownership plan 2004’ at the European Centre for Employee Ownership’s 16th Annual conference in Cannes.

The bank offers share plans to 68,000 employees in 14 countries. These include sharesave, a company share option plan and an unapproved scheme, named ‘sharekicker’, which is similar in design to a share incentive plan.

Shares are seen as an important part of corporate strategy as well as a pure benefit to staff.

Julian Foster, manager of product development and implementation at HBOS, said: “HBOS sees share plans as part of the overall reward package. Having plans for UK employees [means] there are tax advantages [for staff], but there is still a benefit to people who aren’t in the UK tax system to own shares or have options in HBOS. The only difference between the international plans and UK sharesave is the tax jurisdiction in which the individual is based.”

An international scheme ensures that the interests of staff are aligned with those of shareholders.

Foster added: “Even if there aren’t the same tax advantages [for non-UK staff] on the savings side or the options side, there are advantages in the increase in value of the shares. If the share price goes up and is higher than the option price in the end, then the individual makes a gain. While that gain may be taxable, it is still a gain.”

In the past year HBOS has also won a ProShare Award, and its second Global Equity Organisation award in as many years.

Employees often fail to recognise the value of free shares offered to them by employers.

The number of staff that take up free shares has fallen to 67% from 85% in 2003. ProShare’s Share Incentive Plan Survey Summer 2004 also showed that this varies widely between organisations – from 20% to 100% – suggesting that the quality of an employer’s communication strategy can influence employee’s perception of the scheme.

The number of employers offering staff matching shares has also fallen since last year’s survey – from 54% in 2003 to 49%. More organisations, however, are now choosing to include this option in a share incentive plan (Sip).

Sharesave schemes, meanwhile, have increased in popularity according to ProShare’s Sips and SAYE 2004 research. Employee take-up has increased across all lengths of scheme, most notably for three-year schemes, which jumped to 32% this year up from 25% in 2003.

For access to the full report visit

Date for tax of shares extended
The deadline for firms to provide the Revenue with details of shares issued to staff has been extended to 30 November.

The extension, which applies to companies that did not receive a copy of the necessary Form 42 by April this year, has been put into place to provide employers with sufficient time to meet its requirements.

It was previously extended from July to September after the new rules, set out in the Finance Bill 2003, caused confusion for employers. Organisations that do not report their share details will face fines of up to £300.

For Form 42 details visit www.

Trends in all-employee share schemes
• Companies are becoming much stricter about doing cost/benefit analysis for their sharesave schemes and share incentive plans. Those with established schemes are starting to ask what they are getting out of them.

• Companies which previously had annual launches of schemes are now considering only launching a scheme every two or three years in order to create a greater impact among staff.

• A number of sharesave schemes are going to be in the money for the first time this year after three or four years of underwater options. This is leading employers to start work on maturity communication. These firms are grappling with whether they want staff to hold on to their shares or whether they should simply let staff sell them. These employers are concerned about staff immediately selling shares and not considering the benefits (and risks) of share ownership, which was frequently the stated objective of the schemes when they were implemented.

Source: Tim Rolfe, senior manager, human capital at Ernst & Young.