The five key stages to implementing an international share scheme
Step one: What do you want to achieve?
The first step for an organisation is to decide on the right type of plan to suit your requirements, your strategy and your desired outcomes. This should also include deciding on the types of benefits, rewards and incentives to be delivered, agreeing the headline messages to be conveyed to employees, and the extent to which you are going to be driven by tax efficiencies and costs. It’s also important to recognise the need for co-operation across HR, company secretarial, finance, risk, legal, and compliance, both at the start and throughout the project.
Step two: Selecting the right solution
Once you’ve worked out what it is you actually want to achieve, you’ll be able to determine the most appropriate solution(s) – which could indeed include multiple plans. It’s not necessary to put all incentives, rewards, and benefits into one arrangement. Cross-border planning can be complex due to the regulations involved, so anything that can be done to simplify the processes, arrangements and administration are likely to produce benefits in the longer term.
Are your aims to retain staff in a volatile employment market, through a corporate transaction, or simply to feel part of the company? Do you want your employees to share in the prosperity of the business?
Other considerations to be thrown into the mix at a high level are your timescales, deadlines and budget. The latter should be considered both on its own and in relation to anticipated benefits obtained. Important corporate milestones will inevitably have an impact on the design and implementation process.
International companies will also need to consider which jurisdictions, service lines and departments will be included in the arrangements. Will all employees benefit in the same way and to the same extent? Will different arrangements apply to different elements of the business in different locations or jurisdictions?
Step three: Identify advisors
Once you’ve concluded the initial thought and design processes for the share scheme(s), you’re well placed to take the next step. And even if you still have outstanding questions, the advisor you choose should be able to help you through the decision-making process.
The next step is to identify appropriate advisors. Size isn’t everything. Organisations should select advisors who meet your specific due diligence criteria and who are able to deliver the solution required. Most advisors don’t administer plans. Engaging with an employee benefits advisor who’s also a plan administrator can provide significant benefits in terms of continuity of service, joined up thinking and flexibility.
Plan administration service providers differ greatly. Services range from offering a menu of prescribed products and services, to those who look to gain a deep understanding of their client, flex their approach accordingly, and deliver a branded combined benefit portal solution intended to provide a truly bespoke service.
Employee benefits advisors are best placed to guide companies through the minefield of cross-board planning, taking your conclusions drawn from step one, through to design, communication, education, development, testing and implementation.
When considering your best route forward, your advisor should ensure you’re presented with the various options available and the tax efficiencies that can be obtained through implementing plans which are approved in the various ‘home’ jurisdictions. It’s important to be mindful of the fact that tax doesn’t have to be your sole driver and blinker you to other solutions, as long as you’re made aware of the consequences. It may also be appropriate to consider engaging a service provider located in an international finance centre. These finance centres can provide solutions which ensure the company and participants remain tax compliant.
Service providers and advisors can provide you with sufficient comfort that these well-regulated, tax transparent, and cooperative jurisdictions are a suitable home for part of your company’s international arrangements.
Step four: Checking your solution is compliant
The details. The company, employee benefits advisors and plan administrator must work together to ensure the plan is compliant, remains compliant and decide how frequently it is reviewed. The elements to be considered are:
- Tax rules
- Data privacy requirements
- Employment laws
- Company laws
- Securities laws
- Exchange control regulations
- Banking regulations
- Financial services regulations
Step five: Maximising the impact through communication
Communication and education are the keys to success. Once the details have been established and the plan designs are being formalised into coherent documentation, the company and the advisors can begin to work on the communication and education pieces of the jigsaw. This helps employees to understand the plan’s benefits and ensure they have all the information necessary to make informed decisions. The importance of this cannot be overstated, especially where employees are required to opt-in or contribute. It can be fundamental to the success or failure of a plan.
The world has changed as a result of improved technology solutions and the global pandemic. Communicating with Generation Z and millennials requires companies to think in different ways to those traditionally accepted as the norm. Social media, short videos and infomercials are replacing paper and email communications. Can your selected benefit administration service provider offer the appropriate technology solution and have the capacity to produce effective and relevant communications? Can your chosen service provider present all employee benefits, not just your share plan solution(s), to your employees in a single platform?
Setting up and managing a share plan in multiple jurisdictions is a complex proposition and requires companies to partner up with advisors and administrators with specialist knowledge and experience. However, with the right combination of strategy and expert support, your international share scheme can form in an integral part of your wider financial wellbeing programme.
The author is Tim Lowe, head of share plans at Buck.
This article is provided by Buck.
In partnership with Buck
Buck is a global, integrated HR consulting, benefits administration & technology services provider.