Share incentives

Share incentives

This subtopic is intended as an introduction to employee share incentive schemes for Private Client practitioners. Share schemes and incentives specialist lawyers will often be instructed by a company to give substantive advice in this area, but it is important for Private Client lawyers to understand the basics.

Introduction to employee share ownership schemes

Employee share ownership typically happens in one of the following scenarios:

•
business succession or ownership succession—private owners, such as an entrepreneur or family business, decide to sell all (more usually, part) of their shareholdings to their workforce
•
insolvency or closure threat—employee buyouts can prove an effective route to recovery for businesses that might otherwise fail
•
independence—companies may decide that a significant and even majority employee stakeholding will demonstrate and help protect the company's independence
•
privatisation—the privatisation of various companies have provided occasional opportunities for employee buyouts, and
•
owner vision—as in the case of John Lewis, Arup Group or Scott Bader, at the outset of the business or later on, the founder of a business opts for employee ownership

There are many ways in which share ownership schemes

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