Best practices for maximizing uptake of your Employee Share Plan

Transcription

1 Best practices for maximizing uptake of your Employee Share Plan Computershare Plan ManAgers

2 EXECUTIVE SUMMARY Employee Share Plans (ESPs) not only allow employees to own part of the company they work for, but also to benefit financially from their business contributions. In addition, according to the results of recent survey research undertaken by Computershare, there is a link between membership in an Employee Share Plan and positive employee behavior. This white paper outlines the myriad benefits of Employee Share Plans for both employers and their employees, and offers best practices for organizations seeking to introduce or improve employee uptake of Share Purchase Plans. Specifically it will help you to understand the importance of leveraging your ESP offering using various methods for encouraging plan participation among your employees. Lastly this paper provides tips on how you can evaluate the effectiveness of your ESP promotion program. With over 30 years of experience in trustee and plan administration, Computershare is the largest Employee Share Plan administrator in Canada. Computershare offers an array of plan alternatives and works as a virtual extension of your company, aligning our Employee Share Plan solutions with your corporate processes and culture. For more information on Employee Share Plans please contact Computershare Plan Managers at >

3 How Employee Share Plans can benefit your company An Employee Share Plan (ESP) can be a valuable addition to your employees compensation package, offering many advantages for both you and your employees. The terms Employee Share Plan, equity compensation, and stock purchase plan are often used interchangeably. An ESP allows employees to purchase shares or units of the company they work for, supplemented by a current or delayed company match, through regular payroll deductions. By offering ESPs, employers are no longer treating employees simply as employees, but rather as part owners of the company. This is because employers are increasingly realizing the benefits that stem from offering an Employee Share Plan. Between 2008 and 2009, Computershare, in partnership with researchers at the London School of Economics (LSE), undertook survey research to understand how its own employees regarded share ownership. The comprehensive survey of 2,780 employees throughout the UK, Ireland, Australia, South Africa, and the U.S. measured and evaluated the perceptions and actions of employees, whether or not they were participants in the Employee Share Plan. Plan membership was also associated with greater attachment to the company, measured in terms of greater feelings of co-ownership, lower absence rates, a lower likelihood of seeking another job, and a greater belief that the company was a good place to work. The results of the 2009 Computershare survey also revealed several ways employers can realize significant return on investment by offering share purchase plans to their employees. For example, the results of the 2009 Computershare survey revealed that employees perceived the share purchase plan to have a positive effect on their motivation to work and that of their colleagues. Further, plan members were more likely to work beyond their contractual hours Potential benefits of ESPs for employees > Ability to purchase shares and invest easily > Discounted or matched share prices > Upside in a down market a lower share price equals more shares purchased > Dollar cost averaging ability to purchase smaller amounts of shares over a longer period of time > Heightened workplace engagement > Option of using RRSPs and TFSAs to potentially minimize taxation > Opportunity to use shares to save for retirement than non-members, a tendency which rose with the size of employees plan contribution and the size of their shareholding. They were also more likely to monitor their co-workers efforts. According to the 2009 Computershare survey, plan membership was also associated with greater attachment to the company, measured in terms of greater feelings of co-ownership, lower absence rates, a lower likelihood of seeking another job, greater concern about the financial standing of the firm, and a stronger belief that the company was a good place to work. Further, the results indicated that 89% of participants took an interest in the company s financial performance on a weekly or more regular basis, compared to 50% of non-participants. How to maximize the impact of your Employee Share Plan Starting an Employee Share Plan or boosting enrollment now means employees who are immediately engaged in the successful performance of a company. While the benefits of share purchase plans are undeniable, plans are often misunderstood by employees and under promoted by companies. Many employees decline to participate in Employee Share Plans because the rules may be confusing or difficult to understand. Most employees join plans either when they are hired or after an employment milestone, meaning participation at a later date often requires a conscious decision on the part of an employee. Because Employee Share Plans are typically a material investment for employers, it is important that participation rate goals are attained. The findings of the Computershare research highlight best practices for ways employers can grow their Employee Share Plans. Simply put, employees will likely not join a plan unless they are presented with compelling benefits. 2 >

4 Best practices to boost plan uptake Use the following best practices to inform ways your company can improve share plan uptake. > Gather data Before starting any promotional effort or campaign you first need baseline data to work from. This data typically comes from within your organization (payroll and HRIS systems) and also from your ESP recordkeeping provider. Once you have collected the pertinent data you can establish where you are and where you want to be. > Create a communication and education plan Documentation best practices > Test documentation to ensure it is straightforward and easy to understand > Include a call to action at the end of any documentation detailing who employees can contact should they have any questions > To enhance uptake on existing plans include employee testimonials as they are realistic and compelling > When using any charts or graphs ensure they depict realistic and accurate examples (i.e. current share price and interest rates) > Utilize varied communication mediums Any data you collect should inform a strategic plan that involves a cohesive program. Create a formal communication plan detailing how you will educate the employees at your company and include deadlines, deliverables, goals and a dedicated team. This will enable you to quantify your successes and monitor any progress in increased plan uptake. A good head start for your company would be to base your communication program on similar successful programs you may have already run for your employee health, benefit and/or pension plans. Your existing ESP recordkeeper may also have experience with communication programs meaning they can also be an excellent source for assistance. Your first plan of action should be to get the attention of employees so they can be presented with the benefits of participating in an Employee Share Plan. Build upon traditional ways of reaching employees (such as information sessions) by utilizing varied communications mediums including written, verbal and technological ones. Consider harnessing more contemporary mediums like webinars, video campaigns, social media, and the company intranet. All of these can be bolstered with informational posters, pay stub notices, giveaways, > Make documents clear and easy to read - Don t underestimate the importance of formatting and company branding > Have all communications reviewed by your legal team > Use simple language Define all technical/industry terms to avoid confusion > Outline risks and tax consequences Include potential downsides of ESP participation (i.e.: declining share prices) > Review plan participant behavior In order to gauge the success of your plan communications, measure the number of take-ups and questions after a campaign contests, and a documentation library with documents such as FAQs, contact sheets and white papers. Most importantly, when selecting which of the aforementioned communication mediums to use, consider which ones best reflect the culture of your company. > Nominate colleagues as plan advocates Tips for communicating successfully with your employees Why not use an employee you have identified as being well informed about your plan as an internal plan champion? Tangible, real-life experiences that demonstrate what certain employees have done with the proceeds of their ESP can be quite convincing for those considering plan participation. In the 2009 Computershare survey 40% of respondents stated that colleagues were the single most important factor in deciding whether or not to join a plan. 3 >

5 Employee plan advocates can provide testimonials that can be utilized in your internal campaigns or at live meetings to let other employees know about their positive experiences with the Employee Share Plan. > Encourage manager involvement Ways of measuring the success of your ESP promotion campaign > Pre and post-campaign plan participation numbers > Number of employee inquiries > Manager feedback > Patterns of stock ownership > Feedback from employees or employee surveys Because most employees interact with their managers each day, managers can be an excellent way to promote share purchase plans. Managers can do a lot of campaigning on your behalf by asking that particular documents be read by employees, and they can discuss the plan during staff meetings and can require mandatory attendance at share plan-related meetings. It is suggested however that managers first receive coaching and education from you to ensure they have accurate and helpful talking points. To do so, consider hosting train the trainer sessions to educate managers on your Employee Share Plan. When advising managers, provide talking points on what they should and should not discuss with their staff. To inform how to approach manager training, first research what managers with higher participation rates in your organization are doing and saying to their employees. > Undergo scheduled campaigns and follow-ups If you have implemented an internal campaign with the above facets and have more employees joining your program and a decrease in inquiries and questions, that is one positive sign your program is succeeding. To ensure you have reached all employees consider sending confirmation of non-participation notices to those employees who are not plan members. Be sure to include promotional materials or links to detailed share plan information. According to the Computershare survey, 20% of people are thinking of joining a company share plan and therefore simply need tipping over the edge. Schedule regular campaigns and follow-ups as simply promoting your share plan during its initial rollout or via handouts will not always maximize its uptake. Ways to increase depth of share ownership Not only can employees be encouraged to participate in Employee Share Plan programs, but the level of their participation can also be increased in terms of how many shares they purchase. According to the 2009 Computershare share plan survey, 64% of people said that after joining the plan they never reviewed their share plan contribution level. In order to increase depth of share ownership, consider creating a mechanism to get employees to regularly review their share plan contributions. Often times encouraging understanding of plan mechanisms has the benefit of getting greater plan involvement. Ways to deepen understanding of plans include providing FAQs, informational posters, employee handbooks, webinars, and PowerPoint presentations, all of which can be made available via the company website or intranet. Boost your plan uptake today! If you plan to boost the uptake of your company s new or existing Employee Share Plan then first ensure you have clearly defined goals and an internal work and employee communication plan at the outset. This will make it easier to unveil your plan and most importantly, to make it successful. Contact your existing or potential plan provider to ensure they offer the above benefits and services. 4 >

6 Vancouver Calgary Halifax Richmond Hill Montreal Toronto ABOUT COMPUTERSHARE Computershare (ASX:CPU) is a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications. We also specialize in corporate trust, mortgage, bankruptcy, class action, utility and tax voucher administration, and a range of other diversified financial and governance services. Founded in 1978, Computershare is renowned for its expertise in high integrity data management, high volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the world s leading organisations use us to streamline and maximize the value of relationships with their investors, employees, creditors and customers. Computershare is represented in all major financial markets and has over 12,000 employees worldwide. For more information, visit Computershare Trust Company of Canada. All rights reserved. The information contained herein is general in nature and is not intended to provide legal or tax advice. Applicability to specific situations should be determined through consultation with your legal and/or tax advisor. CPM_MAXIMIZING_UPTAKE_ESP_WHITE_PAPER_ indd