Equity-based compensation is a highly effective tool for aligning the interests of executives and employees with those of shareholders and turns employees into owners. Increased identification with the company incentivizes employees to contribute to the long-term, sustainable success of the company.

Hence, it is not surprising that most listed companies have implemented equity-based long-term incentives (LTIs) for their executives. In addition, many companies set share ownership guidelines, which require executives to buy and hold a certain number of shares over a longer period of time.

Following a similar principle, more and more companies are introducing employee share purchase plans (ESPPs) for employees throughout the organization. These plans enable employees to buy shares of the company at a preferential rate, or receive matching shares for a certain number of shares, which they purchase.

Equity-based LTIs and ESPPs must support the strategy of the company, fit to the company’s culture and be aligned with the corporate governance and regulatory requirements. The implementation process and communication to employees are crucial for the success of ESPPs.

The hkp/// group experts have many years of experience with regard to LTIs and ESPPs in the DACH-region and internationally. As such they can support companies in all relevant areas - from design to implementation and communication.

* Photo by Marius Ciocirlan on Unsplash
Author Michael H. Kramarsch

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