10 Things to Consider When Rolling Out a Global Share Plan

August 19, 2020 Shareworks Marketing

Launching a global share plan isn’t something you can achieve before breakfast. It takes a lot of preparation, needs contribution from a variety of experts and ongoing investment but, if you get it right, the benefits make it worthwhile. Your employees are your biggest asset and rewarding them with the chance to become shareholders (possibly at a discounted rate), makes them more likely to act in the company’s long-term interests. It also helps to attract and retain talent.

And, by encouraging them to contribute regularly, you’re helping them to build up their financial wellbeing and reduce associated stress, which could affect their performance further down the line.

Here are 10 things you need to consider to maximise the success of your global share plan:

 

  1. Accessibility: If your share price is relatively high, think about allowing fractional shares to enable employees with low contributions to participate in every purchase cycle, as it will feel more meaningful to them.
  2. Streamlining processes: Look to centralise and automate your HRIS system, and possibly attempt to consolidate payroll feeds where possible. This makes managing contribution changes and handling leavers far easier. 
  3. Tax efficiencies: Identify jurisdictions with tax-qualified plans (e.g. Share Incentive Plan in the UK, section 423 plan in the US, Approved Profit Sharing Schemes in Ireland etc.) and utilise these benefits where possible to help increase the benefit and employee participation rates.
  4. Dividend reinvestment: If your share plan includes dividends then think about allowing reinvestment, as international wire fees often exceed the cash dividend amount and this way employees can build up their shareholding.
  5. Registration and filings: Establish if there are any legal obligations in the countries you have in scope (e.g. China SAFE registration, Blue Sky filings in the US etc.) and allow time to process these as some are more complex and take longer than others.
  6. Regulatory limitations: You may not have many people in some jurisdictions so the costs, particularly around filings and legal or tax advice, can prove restrictive. If so, consider putting a phantom plan (mirrored features, but a cash equivalent payout instead of shares) in place.
  7. Payroll complexity: For a smooth and fair process, simplify leaver provisions and agree their definitions with each country from the start. Interpretations can vary, which can result in unfair outcomes. 
  8. Long-term share ownership: If you want employees to be invested beyond the plan term, include ‘Sell To Cover’ as a transaction choice. This allows them to seamlessly sell enough shares to cover costs (tax and trading fees etc.) and keep the remaining shares.
  9. Reducing the admin burden: To make things easier for employees to stay in the plan, include ‘evergreen’ enrolment. This allows them to continuously remain a participant until they revoke their decision.
  10. Flexible contributions: Think about allowing monthly contributions into the plan, where possible, as an alternative to one-off investments. By doing this, you’ll make the plan more affordable and accessible to your employees.

While there’s far more we could tell you about how to efficiently launch and maintain a global share plan, you’ll certainly give yourself a higher chance of success if you consider all of the above.

If you’d like to know more about best practice when launching a new global share plan, or about how our share plan administration services make it easy for you to manage one, get in touch.

 

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Information made available by Shareworks by Morgan Stanley is for informational purposes only and does not constitute legal or tax advice. You should always consult with and rely on your own legal and/or tax advisor(s) as Shareworks does not provide legal or tax advice and the information is not tailored to the specific situations of your company or your employees. The information may not be current and is subject to change without notice. Shareworks makes no representations or warranties concerning the completeness or timeliness of the information for your purposes.

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