Many employers believe that where employees have a stake in their company's success, they will be more motivated and positive about their work, and that this will in turn benefit the company. Such employers implement share plans to allow their employees to become partowners of the company, alongside any founder and external investors. Research evidence does show a positive connection between employee share ownership and company performance.
Employee Share Plans take two main forms:
In the United Kingdom, tax incentives are available for both discretionary and all-employee plans under HMRC "Approved" schemes.
Based on HMRC statistics in July 2009 we estimate that there are currently over 11,000 companies in the UK with Approved Employee Share Plans which offer tax benefits both for employers and the employees who participate. In addition, there are "unapproved" plans (i.e. without tax benefits) offered by both listed and non-listed companies.