1. Set clear objectives
Set clear objectives of what you want to accomplish with your global employee share plan. For example, your primary goal could be:
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Each of these are very different, and if you want your plan to be successful, the objectives should strongly influence your plan design and operation.
2. Agree the budget
Deciding and setting your budget is a very important first step to an effective global employee share plan. If you don’t have the budget to award shares, administer the operation or ensure you’re legally compliant, your plan will fail before it has begun. For these reasons, a staged rollout of a global share plan can be highly beneficial.
3. Identify the target population
Decide who in your business you will be targeting. An executive or discretionary award plan doesn’t have to be offered to everyone and can often be more flexible in terms of award type.
Whereas an all-employee, or broad-base plan is of course for everyone and usually follows one of the more common design patterns, such as share purchase plan, with a discount or match. Certain types of these plans have strict rules on eligibility, for example, the UK SIP and SAYE generally must be offered to all employees.
4. Consider the incentive effects
The most generous plan doesn’t always mean the most successful. The plan structure, ease of participation and communication can all be equally influential on the incentive effect.
5. Choose from shares or cash
Considering your objectives, think about how important it is to give shares to your employees? Or is it OK to give cash? Whilst most companies aim to deliver shares where possible, ensure you check the local rules, as some countries have securities laws or foreign exchange restrictions that might prohibit this. At the moment, ‘Cash is King’ – so companies are looking to deliver shares wherever possible, and some are even substituting usual cash pay or benefits (e.g. salary) with shares.
6. Assess the regulatory requirements
Be sure to check the applicable regulations in all countries and sectors that you operate in. Tightly governed sectors such as financial services will be more restrictive and some regions like Asia, Africa and Latin America aren’t straightforward - so ensure you know exactly how much you can offer, and where.
7. Understand the tax implications
It is vital to consider the tax implications of your global share plan in all countries. If planned incorrectly, you could leave your participants with a tax charge they can’t afford or weren’t expecting. This is particularly important for an all-employee plan which includes a range of award types e.g. free shares, purchased shares, matching shares - and which might be available to participants who are not normally used to holding shares, and who could potentially be struggling during these unprecedented times.
Think also about whether you want to try and achieve a particular tax-qualified status in any jurisdiction – this can be more complicated, but the tax and social security savings for employees and the employer can really be worth it in some countries.
8. Develop engaging communications
Even if you have a great share plan to offer, if you don’t explain it to your employees in a clear, compelling way, it will unlikely have the desired effect. This is the case more than ever now when share price volatility will no doubt be of concern to your employees.
9. Decide on translation needs
It’s always a balance between what’s required, what’s recommended, and what makes the most sense from a consistency perspective within your organisation. Check out the applicable rules and then make an informed decision on what is most appropriate for your company and employee population.
10. Evaluate market practice
Although we all like to be unique, it’s OK, and actually considered good practice, to look at your competitors when deciding on / re-evaluating a global share plan solution. Look at what is, and what isn’t working for them, and get familiar with what employees in your countries and sectors will expect.