Employee Benefit Plans
Developing employee benefit strategies for internationally mobile employees and third country nationals presents a major challenge for many human resource managers of multinational companies. The difficulty usually revolves around the need to ensure that benefits for internationally mobile employees are comparable and consistent with the overall benefit strategy of the parent corporation.
The Proteus Transnational Pension and Savings Plan from Jersey Trust Company provides practical solutions to these needs in a manner that meets the expectations and requirements of both employers and employees.
Employee Share Incentive Plans (SIP)
These UK share schemes are open to all eligible employees and the three main types of plan are:-
- employers can give employees shares in the company up to a value of £3,000 per annum for zero consideration
- each year, employees can purchase partnership shares up to the value of either £1,500 or 10 per cent of their gross salary (whichever is less)
- employers can match the purchase of shares by an employee up to a factor of 2 for each share purchased
All shares are held in a trust and share dividends can also be held this way. Dividends of up to £1,500 in any given tax year can be invested in new shares, provided that such shares are held for a minimum of three years.
Long Term Incentive Plans (LTIP)
Long term incentive plans involve an award of shares to an employee contingent upon the achievement of certain performance targets. These targets can be personal, team or corporate targets (or a mix of the three).
The awards may be held in trust until the expiry of the performance period and then released if the performance target has been achieved.
Employee Ownership Plans
Transferring ownership of part or all of a business from the current owners to the employees can be an attractive proposition, whether that be to achieve an exit from the business or to generate and foster a partnership culture. This can be facilitated by creating an employee benefit trust which owns the business for the benefit of the employees. The profits of the business can be used to pay the purchase price over a number of years and thereafter to provide profit sharing bonuses to the employee owners.
By using a trust, the company eliminates the need to cancel, issue or transfer shares as employees leave or join the organisation and Jersey Trust Company can provide the trust vehicle and independent trustees to look after the interests of all beneficiaries.
Company Share Option Plans (CSOP)
These plans allow employees to benefit from the growth in the share price of the employing company over a period of time.
Deferred compensation plans often involve an award of cash bonuses to employees or executives conditional on achieving certain performance targets over a specified period of time.
Multinational companies often operate in territories where the local market for provision of employee benefits, such as pension plans is underdeveloped. The philosophy of the employer may be to provide similar benefits to all of its employees globally where practical. A solution can be to establish an offshore plan using the skills and expertise of the offshore centre to deliver a local solution.
