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Transcript of SHARING SUCCESS DELOITTE 2015 GLOBAL …SHARING SUCCESS – DELOITTE 2015 GLOBAL SHARE PLAN SURVEY...
SHARING SUCCESS –
DELOITTE 2015 GLOBAL
SHARE PLAN SURVEY
19 MAY 2016
Jay Foley > Computershare
Bill Cohen > Deloitte
Lisa Williamson > Deloitte
Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)
© 2013 Deloitte LLP. Private and confidential.
Background
Source: 2015 survey by European
Federation of Employee Share
Ownership (“EFES”)
% of
listed
companies
Market Capitalisation>Euro200m
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Share Plans Broad-based Executives
4
Methodology 2015 participants - demographics
• 177 companies operating a total of 436 equity plans, consisting of:
• 274 executive plans
• 162 broad-based plans
• Companies are headquartered in the following locations:
• Australia
• Belgium
• Bermuda
• Brazil
• Canada
• Denmark
• Finland
• Germany
• Hong Kong
• Hungary
• Iceland
• Ireland
• Luxembourg
• Malaysia
• Netherlands
• Papua New
Guinea
• Russia
• Singapore
• South Africa
• Spain
• Sweden
• Switzerland
• UK
• US
Source: Deloitte 2015 GSP survey 4
Consumer Goods
Industrials Healthcare
Oil and Gas
Consumer and Business
Services
Media
Property
Other
Finance
Technology and
Communications
Methodology Participants - respondent profile
23%
34%
25%
8%
10% Less than 5,000
5,000 – 20,000
20,001 – 50,000
50,001 – 100,000
More than 100,000
Source: Deloitte 2015 GSP survey
Number of employees Industry
% of respondents % of respondents
5
27% 18%
15%
10%
10% 8%
5%
3%
3%
1%
Executive share plans – plan types What type of plans are companies operating?
8%
32%
64%
26%
4%
38%
72%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share purchaseplans
Share option plans
Share award plans
Bonus deferral plans
2014 2015
Source: Deloitte 2015 GSP survey 8
Regional prevalence around plan types
0% 20% 40% 60% 80% 100%
Bonus deferral plans
Share purchase plans
Share options plans
Share award plans
United States United Kingdom Europe (excl. UK) Australia
% of
respondents
Executive share plans – share award plans How are share awards structured?
9
22% 16%
62%
0%
10%
20%
30%
40%
50%
60%
70%
Nil cost options/nominalvalue options
Restricted shares Restricted stock units% of plans
11%
36%
11% 12%
17%
4%
17% 35%
72% 60%
72% 53%
0%
20%
40%
60%
80%
100%
United States United Kingdom Europe (excl. UK) Australia
Nil cost option/nominal value option Restricted shares Restricted stock units
% of plans
% of plans in
that region
Source: Deloitte 2015 GSP survey
Executive share plans – bonus deferral plans % of bonus that can/ must be deferred
6% 5%
42%
6%
26%
2%
5%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Voluntary deferral Mandatory deferral
<20% 20-40% 41-60% 61-80% >80%
% of bonus that must/can be deferred
Source: Deloitte 2015 GSP survey 10
% of
plans
Executive share plans – retention periods
11
Are shares acquired on vesting of a share
award subject to a further retention period?
Are shares acquired through the options subject
to a further retention period following exercise?
Are shares acquired
subject to a further
retention period
following
exercise/delivery?
14%
86%
Yes No12%
88%
Yes No
0%
5%
10%
15%
20%
25%
United Kingdom United States Australia Europe (excl. UK)
% of
plans
Source: Deloitte 2015 GSP survey
Executive share plans – malus and clawback Do plans provide for malus and clawback?
80%
85%
66%
56%
40%
20%
15%
34%
44%
60%
0% 20% 40% 60% 80% 100%
Voluntary bonus deferral plans
Mandatory bonus deferral plans
Share award plans
Share option plans
Share purchase plansYes No
50%
62%
56%
37%
27%
50%
38%
44%
63%
73%
Voluntary bonus deferral plans
Mandatory bonus deferral plans
Share award plans
Share option plans
Share purchase plans
Malus
Clawback
Source: Deloitte 2015 GSP survey 12
% of
plans
Executive share plans – malus and clawback Do plans provide for malus and clawback (regional analysis)?
13
Executive share plans – drivers and benefits The main drivers for operating executive share plans
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Expand the culture of ownership in the group
Be competitive in the market
Provide corporate / group identity
Drive performance2014
2015
14
% of
respondents
0%
5%
10%
15%
20%
25%
30%
35%
40%
Driving performance Providingcorporate/group identity
Being competitive in themarket
Expanding employeeshare ownership
Very much so Quite a lot Somewhat Very little Not at all Don't know
% of
respondents
The positive impact of executive share plans
Source: Deloitte 2015 GSP survey
Looking ahead Would companies do it all again?
88% 1%
89%
? 11%
Source: Deloitte 2015 GSP survey 15
% of respondents
Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)
© 2013 Deloitte LLP. Private and confidential.
Context
“Ever widening differentials are often
difficult to credibly justify and boards
should be mindful of the possible negative
impact on corporate culture and staff
morale of widening inequality within the
organisation” NAPF Guidelines
16
Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)
© 2013 Deloitte LLP. Private and confidential.
% of European companies having employee share
plans / broad-based plans
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Employee share plans Broad-based plans Source: 2015 survey by EFES
53%
86%
18
Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)
© 2013 Deloitte LLP. Private and confidential.
Broad-based share plans – plan types
What type of plans are companies operating?
36%
17%
25%
6%
42%
16%
21%
4%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share purchase plans
Share option plans
Share award plans
Bonus deferral plans
19
% of
respondents
0% 10% 20% 30% 40% 50% 60%
Bonus deferral plans
Share purchase plans
Share options plans
Share award plans
United States United Kingdom Europe (excl. UK) Australia
Regional prevalence of plan types
Source: Deloitte 2015 GSP survey
Broad-based share plans – share purchase plans Match or discount?
Source: Deloitte 2015 GSP survey 20
% of
respondents
100%
32% 25%
36%
63% 68% 46%
5% 7%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
United States United Kingdom Europe (excl. UK) Australia
Share purchase plan at a discount Share purchase plan with a match Combination of both
Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)
© 2013 Deloitte LLP. Private and confidential.
Broad-based share plans – share purchase plans Match or discount/ level of match
Match vs. Discount Level of
match
3%
51%
46%
Combination Discount Match
15%
21%
9%
6% 9%
40%
1 matching share for every 1 purchased1 matching share for every 2 purchased1 matching share for every 3 purchased1 matching share for every 4 purchased2 matching shares for every 1 purchsedOther
Source: Deloitte 2015 GSP survey
21
% of plans % of plans
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Expand the culture of ownership in the group
Be competitive in the market
Provide corporate / group identity
Drive performance
2014
2015
Broad-based share plans – drivers and benefits The main drivers for operating broad-based share plans
22
% of respondents
0%
5%
10%
15%
20%
25%
30%
35%
40%
Driving performance Providingcorporate/group
identity
Being competitive inthe market
Expandingemployee share
ownership
Very much so
Quite a lot
Somewhat
Very little
Not at all
Don't know
% of
respondents
The positive impact of broad-based share plans
Source: Deloitte 2015 GSP survey
Looking ahead Would companies do it all again?
88% 89%
2%
? 9%
Source: Deloitte 2015 GSP survey 23
% of respondents
Financing of share plans Do companies net settle awards under global share plans?
38%
48%
29%
25%
33%
26%
Never Sometimes Always
Executive plans
Broad-based plans
Source: Deloitte 2015 GSP survey 25
% of respondents
Taking advantage of local tax breaks Do companies change plan design or operation to get tax breaks?
Source: Deloitte 2015 GSP survey 26
% of
respondents
6% 3%
16%
29%
41%
31%
24%
71%
53%
66% 61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
United States United Kingdom Europe (excl. UK) Australia
No
Some countries
All countries (where tax breaks available) Some countries No
Mobile employees What tax approach do companies take for mobile employees?
59%
55%
19%
19%
23%
26%
Apportion income between countries based on relevant legislation applicable for eachcountry
Apportion income between countries using a generic approach (e.g. grant to vest in allcountries)
Tax in full in the country in which they are at the tax point
Executive plans
Broad-based plans
Source: Deloitte 2015 GSP survey 27
% of respondents
Recharging share plan costs to employing entities Do companies recharge share plan costs?
61% of respondents recharge the costs of their share plan to the local entities.
Of the 39% of companies not recharging, complexity of operating recharges is cited
as the main reason.
44%
23%
15%
18%
Complexities of operating recharges Potential saving not considered sufficient
Have not had time to consider yet Other
Source: Deloitte 2015 GSP survey 28
% of respondents
Communication for global share plans Quotes from the 2015 Deloitte Global Share Plan Survey
Communication
is really the key
to the success
of a plan
Effective
communication is
critical but challenging
Education and
communication
is critical
The industry as a whole
is not very good at
communicating with
employees, we need to
do a better job
Communication is
the key element
Communicate, communicate,
communicate!
Do not
underestimate the
communication
Keep it simple with
clear concise
communications in
plain English
Invest heavily in
communication
Source: Deloitte 2015 GSP survey 29
Communication for global share plans What is driving companies to invest in new methods of communications?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Better engagementwith employees
To reduce costs andadministration in the
communicationprocess
Be seen to beinnovative/different
Demand/expectationfrom employees
Other
Executive
Broad-based
Source: Deloitte 2015 GSP survey 30
% of
respondents
Generational trends Which generations value participation in share plans?
2%
4%
13%
18%
14%
27%
39%
33%
14%
7%
2%
1%
68%
62%
49%
49%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Generation Z
Generation Y
Generation X
Employees born before 1960
Strongly Agree Agree Disagree Strongly disagree Don't know
(born 1961 – 1980)
(born 1981 – 1995)
(born from 1995)
Source: Deloitte 2015 GSP survey 31
% of respondents
Equity team
32
Lisa Williamson is an Associate Director within Deloitte’s Compensation & Benefits
practice and has been with the firm for thirteen years.
Lisa began her career in our International Assignment Services group, advising
clients across a broad range of issues affecting globally mobile employees. She began
advising on equity plans in 2007. More recently, Lisa has worked within our Global
Incentives group with a focus on the global tax compliance issues associated with
various types of equity compensation plans. She has also been involved in the design
and implementation of Global Advantage Incentives, Deloitte's automated global tax
withholding solution.
Lisa Williamson
Tel: +44 20 7007 1478
Email: [email protected]
Bill Cohen is a senior partner in Deloitte’s Global Reward Group. He also lead’s
Deloitte’s Global Equity practice.
Bill has over twenty-five years’ experience in this area, and has wide experience in
advising companies in the structuring and implementation of their remuneration
strategies. Bill is particularly well known for his expertise in the area of global share
plans and has worked with numerous of the world’s largest companies in developing
their global share plan strategies.
Bill has written numerous articles dealing with compensation and tax issues which have
been published in journals, newspapers and books. He has also broadcast on the
subject.
Bill has an LLB (Hons) from Nottingham University. He is also qualified as both a
barrister and a solicitor. He is a scholar and prize-winner of Lincoln’s Inn. Bill is a past
secretary to the Society of Share Scheme Practitioners, and a member of the Global
Equity Organisation and the Advanced Share Scheme Study Group.
Bill Cohen
Tel: + 44 20 7007 2952
E-mail: [email protected]
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