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DMGT Engage Employees With Salary Substitute Share Plan

20 May 2021

When COVID-19 changed the business landscape, DMGT made a bold decision to safeguard jobs and keep employees engaged and motivated, offering up to 30% of salary in shares.

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About Daily Mail and General Trust plc (DMGT)

DMGT is a group of consumer and B2B companies providing information and entertainment, and generating total revenues of more than £1 billion. The group offers a number of share-based remuneration schemes to directors and employees comprising of discretionary share options and a tax advantaged Share Incentive Plan (SharePurchase+).

Situation

As for most companies, 2020 was an unusually challenging year for DMGT as it grappled with adapting to the COVID-19 pandemic. There were two issues in particular that this project sought to address.

1. Engage a suddenly dispersed workforce

The health and wellbeing of DMGT’s more than 5,500 employees became a priority as the majority began remote working for the first time. How could the company encourage everyone to remain engaged and motivated in the current unsettling times, despite missing out on the usual office buzz and support?

2. Mitigate a decrease in cash operating income

Pandemic volatility impacted revenues in some parts of the group. How could DMGT safeguard jobs, assure shareholders and avoid using government grants and furlough schemes?

Our guiding principles have been to protect jobs and to create a system which means that we are all contributing, in a fair way, towards the company’s long-term health.

— The Viscount Rothermere, DMGT Chairman

Solution

Equiniti and the DMGT Reward Team worked in partnership to overcome these two issues simultaneously, by launching an innovative Salary Substitution Plan (SSP). It aimed to free up cash while providing employees with a reason to engage in the success of the company during the COVID crisis.

Who, what and how?

For executive directors and dmg media, DMGT and Landmark employees in the UK, US, Australia and Ireland earning above £40,000, DMGT offered the opportunity to take a three-month reduction in pay of up to 30% in exchange for company shares of an equivalent value. The number of shares was calculated based on the average price of three days in April 2020 when the plan launched, with the award vesting in January 2021. There was also a choice to opt into the scheme on a voluntary basis for those earning below £40,000.

Reassuring employees

As share prices were relatively low, employees could see great returns if the share price recovered by January 2021. But in case the market continued to be volatile, a ‘look back’ feature mitigated uncertainty, meaning that if the share price was lower at vesting, DMGT would make up the difference either through cash or additional shares.

DMGT also made it clear that for overseas employees not paid in GBP, exchange rate changes would not negatively affect them. The same exchange rates were used at the beginning and the end of the scheme.

Right plan for everyone

It was crucial to create the best plan for employees and shareholders alike, so in-depth strategic and detailed work was carried out before launch, including:

  • Engaging with the Remuneration & Nominations Committee and advisors
  • Reviewing existing discretionary plan scheme rules and jurisdictional legal and tax implications
  • Liaising with HR and Payroll teams
  • Agreeing requirements for the portal pages

We then worked closely with DMGT to develop high-impact, clear employee communications at launch, pre-vesting and vesting. As this was the first-time many employees had made decisions about share plans, clear communications were vital. Accompanying FAQs included country tax information and statements. To align with DMGT’s sustainability policy, all communications were made to employees electronically removing the need for any paper mailing.

Additionally, DMGT worked with us to encourage any participants who retained shares at vesting, to open a Global Nominee account in order to minimise the issuance of share certificates, achieving a great success rate with only 4 certificates eventually being issued.

Outcome

DMGT’s innovative SSP is now award-winning, having achieved both of its main objectives

1.  Engage a suddenly dispersed workforce

Employees welcomed the opportunity to become shareholders in DMGT and be actively involved in the company’s success. An incredible 99% of eligible employees enrolled in the SSP. Some employees with a base salary below the threshold also chose to participate. With the share price rising from £6.69 to £7.70 at vesting, employees were rewarded by a 15% return for their continued support during a difficult period.

2.  Mitigate a decrease in cash operating income

The SSP supported the group's cash generation efforts and, as a result, DMGT has not taken any government financial support during the pandemic.

This initiative has been extremely well received by our employees. The plan has given them a tangible stake in the success of the company ensuring they are fully engaged and motivated in these unprecedented times.

— Janette Shaw, Group Reward and Benefits Manager at DMGT

Next steps

After the success of the SSP in engaging employees, A Save As You Earn scheme is being planned.

Find out more

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