Company Share Option plans are an excellent way to incentivize Company Employees. However, many Company Owners do not understand the full scope of Company Share Option Plans. This article will help you learn more about Company Share Option plans and how they can benefit your Company!
The 3 main points that we will discuss in this article are
1) What is a Company Share Plan?
2) How does it work?
3) When should I use one?
What is a company share plan? Company Share Option plans are essentially Company Shares that each Company Employee has access to. The Company Owner can choose how many Company Employees get these shares, and the amount of time until they expire (or become fully vested).
These Company Shares can be Non-Voting or Voting depending on what best benefits your Company. If you would like more information about this topic feel free to contact us!
How does it work?
There are several ways in which a share plan may work: either as an award for length of service only; as bonuses based upon performance over multiple years; or according to some combination of both criteria. For example, if someone was hired five years ago but worked hard throughout their career at the company then maybe they should be rewarded with an extra week’s holiday for every year of service. Alternatively, a Company might give employees shares as part of their annual bonus, but only if they hit specific performance targets that have been agreed beforehand.
What are the benefits?
There are several advantages to implementing a share plan:
- They can help to motivate and retain staff by giving them a tangible stake in the success of the company.
- They can provide a tax-efficient way of rewarding employees without having to pay income tax or national insurance on the award.
- Company Shares may increase in value over time, providing employees with potential capital gains profits.
Are there any drawbacks?
One possible downside is that Company Shares may decrease in value if the company’s performance is poor. Company Share Option plans should only be implemented when a company’s future prospects are strong and likely to lead to an increase in the share price.
In conclusion, Company Share Option plans are a valuable way of rewarding employees and providing them with a tangible stake in the success of the company. They can provide a tax-efficient way of rewarding employees without having to pay income tax or national insurance on the award. Company Shares may increase in value over time, providing employees with potential capital gains profits.