Privately owned company looking to broaden employee involvement

Business sector: Engineering

Turnover: £5m

Shareholder/business goals and challenges

  • Broaden employee share ownership culture within the business beyond small group of founder shareholders
  • Ensure those who are actively involved in business can share in proportion of company’s future growth and future profits
  • Tie-in and motivate key employees to grow business value
  • As no exit is likely, create liquidity in shares to ensure that employees see value in their share interests and can buy and sell shares across participating employees

What we did and achieved

  • Implemented tax efficient Enterprise Management Incentive plan under which awards were made to wide pool of employees
  • Vesting of options conditional upon individual and company performance over three year term
  • Internal market created enabling employees to realise value from a proportion of their shares over time
  • Business value doubled across three year performance period and key employee retention improved
  • Significant increase in employee engagement with dividend participation and future rights to buy and sell shares via internal market

About the author

Sebastian Salt Senior Associate

Seb specialises in the design and implementation of employee incentive arrangements.