Share options and incentives

20 July 2022 / Insight posted in Practical guides

The continued growth and success of your business can be dependent on your workforce. It is therefore important to ensure that you are recruiting, incentivising and retaining the right people. Operating a share based incentive scheme can help you achieve these goals.

Share incentive schemes can be divided into two categories:

  • those which involve the company issuing shares to employees directly; and
  • those that involve the company granting the employee the option to acquire shares in the future (commonly referred to as a ‘share options scheme’).

Existing shareholders will often prefer options to be granted, as their current holdings will not be diluted until such time as the options are exercised. Furthermore, options offer employees protection against any fall in value of their employer’s shares, as they will have significant flexibility to choose when they want to acquire their shares.

This summary covers some of the key share incentive routes available.