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An Introduction to Share Options By Gary Watson September 2015
An Introduction to Share Options
By Gary Watson
September 2015
Investigo
Do they work?
YES
... and NO
Share Option Schemes
Investigo
Why Would You Implement A Share Scheme?
• To aid recruitment
• To improve retention
• To motivate key employees
• Is cost effective
• Is tax efficient
Investigo
What Are The Benefits To Your Employees?
• They acquire a stake in the business
• Opportunity to accumulate wealth
• Relatively risk free
Investigo
3 Categories Of Share Scheme
• Purchase and award of shares
• Award of options
• Phantom share awards
Investigo
What Is An Approved Share Scheme?
• EMI
• CSOP
• SAYE
• SIP
A scheme for which certain tax benefits are available to employees and employers
Investigo
What Is An Unapproved Share Scheme?
Everything else!
Investigo
Enterprise Management Incentive
• Aimed at smaller qualifying trading
companies
• Option exercise price can be
discounted to the market value of
the shared at date of grant
• There is no income tax or NIC on
the grant
• Less than 250 employees
• Gross assets of £30m or less
• At sale employees qualify for
entrepreneur’s relief at 10%
Investigo
Company Share Option Plans
• Used where EMI options cannot be
granted
• Gives you an option to buy up to
£30,000 worth of shares at a fixed
price
• Options cannot be exercisable within 3
years of grant date
• There is no income tax or NIC on the
grant
• Grants are subject to CGT
Investigo
Save As You Earn
• Must be available to all employees
who’ve been with the company for a
certain time
• The price is fixed at the start
• You can save up to £500 a month out
of your take home pay
• At the end of the savings contract (3 or
5 years) you can use the savings to buy
the shares
• The interest and any bonus you receive
at the end is tax free
• Gains are subject to CGT unless you put
the shares into an ISA or pension as
soon as you buy them
Investigo
Share Incentive Plan
4 different ways you can receive shares
under SIP:
• Free shares
• Partnership shares
• Matching shares
• Dividend shares
• After 5 years there is no income tax or
NIC on their value when you acquire
them
• Gains are subject to CGT
Investigo
When Do Share Schemes Not Work?
If share schemes are used to attract, retain and motivate, then there are 4 things
that you have to be right about:
• Qualifying criteria
• Timeline
• Transparency
• The quantum
Timeline Of Investigo 2003 – 2015
Change
Management Guildford
Property and Facilities
Management SAP
The Birth of
Investigo London
3RD August 2003
Accounting
& FinanceSt Albans Strategy Reading Milton Keynes Procurement &
Supply Chain
HR
Launch of
Sydney office
2006 2008 2010 2012 2014
GDP 2003-2015
Investigo
Investigo Turnover 2003–2015
£74.3
£66.0
£53.1
£47.0
£42.4
£32.0
£26.0
£19.2
£11.5
£6.5
£3.3
£0.6
14/15
13/14
12/13
11/12
10/11
09/10
08-09
07-08
06-07
05-06
04-05
03-04
Million
£83Million
forecasted
for 2015/2016
Investigo
Darren Burns
Director – Banking & Financial Services
“Investigo is a genuine half way house between alarge scale recruitment business and starting onyour own. Unlike other ‘Equity’ schemes andempty promises around the market, the EMIscheme at Investigo is very real and verytransparent. The scheme is aligned from Day1. The financial incentive is very attractive andwas a huge factor when joining Investigo. This is ahuge reward for circa 5 years of hard work. It’s notfor everyone, so you should be confident inbuilding a brand and a profitable business. If youback yourself then Investigo have proven to sharewealth amongst the group. I interviewed at 9companies and Investigo came up trumps!”
Investigo
Stuart Bonner
Director – Property
“Being a qualified accountant before gettinginto recruitment, understanding companyvaluations was something I’d trained in. Iguess this made me more cynical than mostwhen it came to offers of share schemesworth nothing. The absolute totaltransparency of the deal at Investigo hasbeen key for me to believe and trust in it’spotential outcome”
Investigo
Ben Cowan
Director - Change Solutions
“Apart from the culture and people, a majorattraction for me to join Investigo was thetransparent and straight forward LTIP. Thescheme relates directly to the performance ofthe business I run, not on elements outside ofmy control, which I found particularlyappealing. The EMI scheme demonstratesInvestigo’s commitment to me, and createsloyalty in return, enabling us to focus 100% ondelivering on Investigo’s vision. The EMIscheme, structured as it is, puts my “pay out”destiny in my own hands – something I findextremely motivating.”
Investigo
Terry Dawson
Associate Director – SAP
“Leaving my last company and choosing to joinInvestigo was the biggest decision of my life,one of the reasons I chose to join was the LTIP/EMI scheme that was presented to me. Unlikeother share option schemes that seemedconfusing and less than straight forward, theInvestigo scheme was simple. It will reward mebased on the results of my own performanceand that of my division, so in simple terms Iknow exactly how much profit I need togenerate for the company in a set period oftime in order to achieve my financial goals.This clarity and straight forward approach helpsme to focus on my goals and is hugelymotivating for me. Investigo has literally givenme the opportunity to change my life within aperiod of 3-4 years!”
