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06 May 2020
by Zoe Denny-Thomas

Employee share plans to bring the workforce together now and post-coronavirus

In just a few short weeks the world and the way that we work has changed exponentially. Employers have had to balance employee and customer safety while continuing to operate their businesses. With the value of some (not all) stocks falling, organisations have had to juggle not only external investors but also internal ones – in the form of their employees.

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Although employee share plans may not have been at the forefront of many organisation’s thoughts during this crisis, they should not be forgotten. As we come out of this, there are several implications and considerations for share plans that should come to the fore.

Executive awards

For those making awards to executives and senior managers there will be a need for companies to consider the public perception, both now and in the future. Awards are generally based on a quantum of salary at the current share price that will vest in the future. Given the current market lows, the value of those awards in three or five years’ time could be viewed with some cynicism by shareholders and the public – especially where firms have ‘dipped’ into the public purse using furlough or loans to survive.

There is a counter argument that a full recovery to pre-COVID prices (or even higher) will take some time and much hard work to get to. As such, any share gain on the part of the executives may be deserved, but investors and wider society can be expected to insist that the executive experience reflects that of employees and shareholders. Clearly this is something that will need careful consideration at RemCo level.

Employee awards

On the employee side, and perhaps far less controversially, those companies considering 2020 Save As You Earn launches, with employees entering savings contracts this year, may find 2023 or 2025 to be windfall years for their Sharesave maturities, despite being subject to the same pricing effect.

This is why it is important that all employees are aware of the benefits available to them. An increasing number of firms are offering information and advice to support the financial wellbeing of their employees, and ensure that they have the necessary tools available to make financial decisions about joining Sharesave plans.

Equally, where options are maturing now, and may be underwater, firms need to be clear in their communication and ensure that employees understand what this means and what choices are available to them.

A key message is that firms need to be agile and embrace technology to communicate and stay in touch with their employees. Communication during this crisis has been key to employee engagement and it will certainly have implications for the way benefits are communicated in the future.

Looking ahead

Share plans have a continuing role to play in bringing people together both now and going forward, enabling a focus on working together even when we are not physically together.

It is too early to know when this pandemic will really end or what our world will look like on the ‘other side’, however share plans will have a crucial role to play for both employers and employees. With increased working from home, which surely will continue on a much greater level, a well communicated share plan may be the best way to ensure that everyone still feels part of the wider organisation, with one purpose and a sense of team.

We, as an industry, have long known the benefits of share plans in encouraging employees to feel and act like owners, allowing them to share in the success arguably created by their hard work. As terrible as the current situation is, we will emerge on the other side with companies having seen the loyalty and value of their staff, encouraging greater participation in existing and new share plans as we rebuild the future together.

The author is Zoe Denny-Thomas, head of member services at ProShare.

This article is provided by ProShare.