Incentives (Employment)

Incentives & Remuneration

Implementing an appropriate and effective remuneration and incentive policy for management and employees is a key driver for a successful business. Having the right arrangements in place increases executive and employee engagement and motivation, improves relations with shareholders and other stakeholders, and gives companies a greater ability to attract, reward and retain the best talent.

We work hard to ensure we understand our clients’ businesses and work with them to design and implement bespoke executive and employee incentive plans. We identify the financial metrics against which an incentives plan should be measured and structure the incentives strategically to drive the behaviours that all good companies want. The resulting arrangements are always simple, focused and effective. We understand the regulatory landscape and have a firm grasp of continually evolving regulatory requirements for executive remuneration.

We support clients throughout the life cycle of their incentive plans, providing quality advice together with commercial solutions, whether on design, implementation or post implementation advice, as well as advising on Employee Benefit Trusts and transactional support.

We work with businesses of all sizes, from the largest FTSE-listed global organisations to smaller, high-growth entrepreneurial businesses or private, equity-backed companies. It gives us a unique perspective on the market.

We have a passion for working with private companies who will often need more bespoke and tailored advice in respect of their incentives arrangements. Our expertise in this field was recently recognised with our nomination for Best New Share Plan 2017 for our design of a highly innovative equity plan for a privately-owned fintech company with significant regulatory and structural challenges. The plan required innovation and creative thinking: we developed an arrangement that was new to the market, whilst still ensuring the plan delivered the right commercial outcome in a simple, clear manner.

We work with our clients to design incentive plans that meet their objectives. This includes advising on:

  • financial metrics;
  • share option and other share based arrangements, for example:
    • HMRC tax beneficial plans including EMI, Company Share Option Plans, Save As You Earn and Share Incentive Plans;
    • joint share ownership plans;
    • growth shares;
    • employee shareholder status;
    • long term incentive plans;
    • deferred bonus arrangements; and
    • cash based and phantom share plans;
  • employee ownership arrangements for employee owned businesses
  • structuring plans in a tax efficient way and advising on the tax impact for both employer and employee;
  • institutional shareholder and corporate governance requirements;
  • overseas considerations and tailoring plans accordingly.

Following the design process we handle all aspects of plan implementation. This includes:

  • drafting plan rules;
  • compliance with regulatory requirements, including in overseas jurisdictions (our lawyers have implemented plans in over 80 countries), such as:
    • securities laws;
    • plan filings;
    • exchange control regulations;
    • data protection;
    • employment rights;
  • board and shareholder approvals;
  • drafting employee communications.

Our relationship with our clients doesn't end at implementation. We continue to support clients throughout the lifetime of their incentive plans, including:

  • plan vestings and option exercises;
  • leavers;
  • plan amendments;
  • advising on share sourcing strategies;
  • share dealing and market abuse regulations;
  • disclosure of directors’ remuneration for listed companies.

Corporate activity will have an impact on incentive plans. We advise on takeovers, mergers and acquisitions, demergers, capital raising activities and initial public offerings and structure appropriate proposals to be made to plan participants.

We establish employee benefit trusts to underpin the operation of many types of share incentive plans and have relationships with independent trustees who administer these trusts.

We specialise in assisting companies with their executive incentive arrangements, in particular, with their equity incentives.

For listed companies we assist with:

  • designing and implementing short-term and long-term equity incentives;
  • designing performance conditions relevant to the business, including ESG metrics;
  • advising on the ever-changing regulatory requirements, investors' views and market trends;
  • identifying and mitigating reputational risk;
  • regulatory compliance and disclosures;
  • executive hires and terminations; and
  • the legal and tax implications of incentive structures.

We provide similar services to those described above for non-listed companies, but without the constraints of a public listing, we can help develop more bespoke arrangements.

We advise on the practical application of the financial services remuneration codes which apply to UK entities, and of future changes that will impact an entity's remuneration arrangements.

We help clients with the structuring of their incentive arrangements so that they are compliant with the relevant remuneration codes but using permitted proportionality where appropriate. We often work with our employment colleagues on the application of the remuneration codes to new hires and terminations.

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