ProShare Policy Paper - Super-charging Employee Share Ownership

Save As You Earn (‘SAYE’ or ‘Sharesave’) was introduced in the Finance Act of 1980, with the first plans being approved by shareholders at plan issuer companies’ AGMs the following Spring. The Company Share Option Plan (‘CSOP’) came into force via the same mechanisms in 1995. The Share Incentive Plan (‘SIP’) and Enterprise Management Incentive plan (‘EMI’) both came into force in 2000.

These plans – collectively, the UK’s tax-advantaged plans – all operate in different ways, with varied tax advantages for participating employees and employers, as set out in the relevant legislation (ITEPA 2003, schedules 2, 3, 4 and 5). What they all set out to do is to achieve combinations of the following:

- Increased productivity;
- Shared financial reward with the company’s employees;
- Increased employee motivation;
- Increased employee engagement; and
- Improvement of employees’ financial wellbeing.

For further detail on how these plans work please refer to the information in Appendix 3. For detailed statistics on how these plans are operated in practice, market and industry trends on takeup and participation rates, please refer to the accompanying ‘ProShare SAYE & SIP Report’ (additional copies available on request from ProShare – see contact details on page 11).

Whilst all of these plans have undoubtedly helped employees and employers considerably over the years of their operation, some of their design features are very much the product of their respective times – and times change, rendering some of these features irrelevant or actually counterproductive. We shall cover these issues in the next two sections, setting forward proposals and ideas on how to mitigate and overcome them.