Introduction to share schemes

Employee ownership schemes

Employee ownership typically happens in one of the following scenarios:

1. •

   business succession or ownership succession—private owners, such as an entrepreneur or family business, decide to sell all, or, usually, part of their shareholdings to their workforce

2. •

   insolvency or closure threat—employee buyouts can prove an effective route to recovery for businesses that might otherwise fail

3. •

   independence—companies may decide that a significant and even majority employee shareholding will demonstrate and help protect the company's independence

4. •

   privatisation—the privatisation of various companies have provided occasional opportunities for employee buyouts, and

5. •

   owner vision and incentivisation—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 can be categorised. The most popular forms of UK share schemes can be divided into three categories:

1. •

   the award of share options or conditional share awards

2. •

   the direct purchase and award of shares, and

3. •

   cash-based awards which are linked to share value

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