Employee Incentives - Salamanca · Employee Incentives A key element of every business is an...
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Employee Incentives A key element of every business is an appropriate and tailored remuneration strategy. The form the remuneration strategy takes will depend on the nature of the business and the primary objectives of the Company. Increasingly, awards linked to Company performance in the form of cash or shares, often delivered through a Trust, are seen as an essential element of any senior employee’s remuneration package. The implementation of a remuneration strategy which includes a cash or share based Scheme, delivered through a Trust, seeks to align the interests of employees with those of shareholders. Such a Scheme enhances employee engagement, improves employee retention and cultivates general employee well- being with the aim of promoting overall business performance. The Practicalities The structure for employee incentive arrangements is simple and typically entail a Company establishing a discretionary Trust, the beneficiaries of which would include the employees and former employees of the Company. Salamanca Group Trust & Fiduciary would act as Trustee of the Trust and provide administration services. A set of Scheme rules, tailored to the remuneration strategy of the founding Company and formulated through discussion between the Company, the Trustee and appropriate advisers, would be drafted and circulated to eligible employees at the commencement of the Scheme. The Scheme rules will usually either be drafted internally by in-house legal and company secretary teams or a lawyer specialising in remuneration planning. We work closely with a number of firms and would be happy to make appropriate introductions if required. Assets, either cash or shares, are settled into the Trust by the Company and the Trustee would use these assets to settle employee awards as and when they fall due under the terms of the Scheme rules. The Trust vehicle is flexible and the Trustee can operate multiple Schemes with different Scheme rules for a Company under a single Trust. Benefits of employee incentives: —Promote overall business performance —Enhance employee engagement —Improve employee retention —Cultivate employee well-being
Transcript of Employee Incentives - Salamanca · Employee Incentives A key element of every business is an...
Employee Incentives
A key element of every business is an appropriate and tailored remuneration strategy. The form the remuneration strategy takes will depend on the nature of the business and the primary objectives of the Company. Increasingly, awards linked to Company performance in the form of cash or shares, often delivered through a Trust, are seen as an essential element of any senior employee’s remuneration package.
The implementation of a remuneration strategy which includes a cash or share based Scheme, delivered through a Trust, seeks to align the interests of employees with those of shareholders. Such a Scheme enhances employee engagement, improves employee retention and cultivates general employee well- being with the aim of promoting overall business performance.
The Practicalities
The structure for employee incentive arrangements is simple and typically entail a Company establishing a discretionary Trust, the beneficiaries of which would include the employees and former employees of the Company. Salamanca Group Trust & Fiduciary would act as Trustee of the Trust and provide administration services.
A set of Scheme rules, tailored to the remuneration strategy of the founding Company and formulated through discussion between the Company, the Trustee and appropriate advisers, would be drafted and circulated to eligible employees at the commencement of the Scheme. The Scheme rules will usually either be drafted internally by in-house legal and company secretary teams or a lawyer specialising in remuneration planning. We work closely with a number of firms and would be happy to make appropriate introductions if required.
Assets, either cash or shares, are settled into the Trust by the Company and the Trustee would use these assets to settle employee awards as and when they fall due under the terms of the Scheme rules.
The Trust vehicle is flexible and the Trustee can operate multiple Schemes with different Scheme rules for a Company under a single Trust.
Benefits of employee incentives: —Promote overall business performance —Enhance employee engagement —Improve employee retention —Cultivate employee well-being
Contact
Jo Gorrod
Director Trust & Fiduciary [email protected] +44 (0)1534 512575
Scott Nelson
Associate Director Trust & Fiduciary Jersey [email protected] +44 (0)1534 512584
The Use of the Trust
Whilst employee incentive schemes can be operated by companies directly there are numerous benefits to the use of a trust structure. From the employee’s perspective the trust structure offers a guarantee that the scheme is being operated independently for the benefit of employees; there are less opportunities for conflicts of interest to arise; company management time is not spent on the administration of the scheme and importantly the assets of the scheme are ring fenced.
The principal points of contact between the Trustee and the founding Company are usually a blend of the company secretary, human resources and chief financial officer. Large Companies with Schemes including thousands of employees who may benefit
often establish dedicated teams to assist with the maintenance of the Schemes and monitoring of the awards and associated performance conditions.
We offer services to both listed and private companies from a wide range of sectors, including energy, retail groups, wealth managers, financial services, engineering and infrastructure support.
We have experience of administering many different types of employee incentive schemes including:
— HMRC Approved schemes — Deferred bonus plans — Long term incentive plans — Phantom share plans — Share option plans — International share plans
Case Studies
Client Public companyRegion Middle East
We were asked by a public Company, listed on a Middle Eastern stock exchange, to design and implement a share based executive incentives scheme for a multinational group of senior management with the aim of improving staff retention in an environment where staff turnover had traditionally been an issue and an ongoing impediment to the growth and performance of the Company.
Working alongside the Company’s advisers and lawyers in multiple jurisdictions a bespoke share based deferred bonus plan was established which met the needs of the company and the expectations of senior management. Providing trustee and administration services we liaise with and provide reporting to both the Company and senior management.
The plan has proven to be a beneficial tool for the retention of staff.
Client UK PlcRegion UK
We were asked by a UK Plc, who employ over 9,000 staff, to provide trustee and administration services to an offshore employee benefit trust which would operate a number of unique employee incentive schemes utilising both cash and share awards.
Working alongside the client, their advisers and local lawyers we implemented a comprehensive service offering to ensure the accurate and efficient administration of the schemes.
Our experience of administering employee benefit trusts and the flexibility of our systems and approach enabled the UK Plc to incentivise its employees through a variety of bespoke schemes tailored to their specific requirements. The various schemes operated by the trust have proven to be an important tool for incentivising staff and remain a key part of the remuneration strategy of the UK Plc.
IMPORTANT NOTICE
Salamanca Group Trust & Fiduciary does not provide clients with tax or legal advice. The information contained in this document is for general information only and should not be relied upon in relation to any specific circumstances. The reader should seek specialist professional advice in relation to the application of the law to his personal circumstances. Salamanca Group Trust & Fiduciary accepts no responsibility for any loss arising from action taken by persons using this material.
The Salamanca Group’s Trust and Fiduciary companies include:
Salamanca Group Trust (Jersey) Ltd, regulated by the Jersey Financial Services Commission, registered number 58347, registered office One The Esplanade, St Helier, Jersey, JE2 3QA, Channel Islands;
Salamanca Group Trust (Switzerland) SA, regulated by the Association Romande des Intermédiaires Financiers and a member of the Swiss Association of Trust Companies, registered office 1 Rue du Pré-de-la-Bichette, P.O. Box 1744, 1211 Geneva 1, Switzerland;
Salamanca Group Trust (Mauritius) Ltd, regulated by the Mauritius Financial Services Commission, registered address Level 8C, Cyber Tower II, Ebene Cyber City, Mauritius.
©Salamanca Group Holdings (UK) Ltd 2015Salamanca Group®
Salamanca Group Trust (Jersey) LtdOne The EsplanadeSt HelierJerseyJE2 3QAChannel Islands
Tel: +44 (0)1534 512 512Fax: +44 (0)1534 512 513
www.salamanca-group.com
