easyJet take their employee share plans to new heights
When it comes to mobile workforces, airlines are the ultimate example. How do you create an effective suite of flexible share plans for 14,000 employees located in eight countries over 30 different bases – and when most regularly travel across the globe? When bright, friendly customer service is what sets your business apart, how do you keep all those employees engaged and excited by your schemes, even after 13 years? These were just a handful of the issues Equiniti and easyJet set out to address in 2018 by continuing to improve the airline’s market-leading share offering.
What is easyJet’s share plan?
To take into account the geographic, generational and demographic diversity of its workforce, easyJet offers a suite of plan choices to all employees.
A performance award: When easyJet meets its annual financial targets, it makes a performance (or free) share award to all its employees, easyJet has been able to make this award in eight of the last nine years.
SAYE: easyJet has offered this each year since 2005. All employees are invited to join, giving them an opportunity to invest in the success of the business.
BAYE: UK employees have the opportunity to invest into a SIP partnership plan, with easyJet matching those contributions on a 1:1 basis.
The principles of the plans are the same regardless of where an employee is based so everyone feels like a valued part of an international workforce. Employees can pick the options that suit them best based on their financial situation and local tax rules.
What does this suite of plan choices aim to achieve?
Key objective 1 - Create the right culture across easyJet’s mobile workforce
At the core of easyJet’s current strategy and plan is the belief “we’re all in it together”. One of the ways in which the airline engenders this strong team spirit is through its comprehensive share ownership options. By offering shares in easyJet to people at every level, in every country, the entire workforce is encouraged to feel like they have a stake in the success of the company. It means everyone is aligned and has an interest in easyJet’s share price and the future of the business – not simply the top 100 managers with LTIPs and other financial incentives.
Ensuring employees have such a personal claim on the business also aims to increase engagement and motivation and mean easyJet continues to offer the friendly service it has built its success on.
Key objective 2 - Attract and retain the best people
In the low-cost travel industry, it can be challenging to retain staff. While pilots tend to stay where they trained, cabin crew can be tempted away by other businesses where customer service is key. For easyJet, providing an attractive compensation package ensures it can compete for the best people not just in its industry but well beyond. It sees its competitors as being not just other airlines but the entire FTSE 100 and works to match the share schemes of these leading businesses.
The combination of the performance, SAYE and SIP share schemes works as an incentive for people to stay at easyJet, as even within their first few months, employees see their value.
Key objective 3 - Create rewards that are tax efficient for employees and easyJet
As an international business, easyJet needs to navigate local tax rules and jurisdictional restraints. The current share plans flex to local needs, for instance, with the performance award, overseas employees are given options instead of shares to counter local tax liabilities. Over recent years, coupled with the growth in easyJet’s share price, these tax-efficient proceeds have represented a significant portion of employees’ overall income, and at a low cost to the company, while employees share in easyJet’s success.
How were these key objectives worked towards in 2018?
easyJet wanted to continue to increase participation levels and show the value of share plans so employees understand the benefits of signing up and remaining with the airline. Equiniti and easyJet worked to achieve this in two ways.
1. Used technology and an opt-in approach to engage international employees
Equiniti introduced electronic share ownership through a Global Nominee system for all easyJet non-UK accounts. Rather than receive a paper share certificate and dividends in the form of a GBP cheque, employees have constant electronic access to their shares and receive dividends straight to their bank account in their local currency. They can view all their share plans and portfolio under one log in, so plan participation is easy and engaging. More importantly, long term share ownership is a simple and logical next step once their awards vest.
Other advantages include that employees can sell shares online without waiting for a certificate to arrive in the post, can transfer shares directly from maturing/vesting share plans, and choose to sell shares when the market price meets a limit. It’s quicker to process actions, more localised and minimises transaction fees.
At the same time, the international performance share awards became “opt in” rather than “opt out” to maximise initial employee engagement and maintain excitement in easyJet’s share plans. As a result, 6,000 new Global Nominee accounts were set up in 2018.
Also in 2018, employees could sign up for SAYE by text message – a vital new communications channel when the vast majority of the workforce are pilots or cabin crew on the move, with no set desk or computer and little time to spend on responding to emails. More than 300 people used this option.
Another example of innovation in 2018 lies in the design of the international SAYE plans where participation levels had lagged behind UK levels. By simplifying the process, it was made easier for employees who transfer between countries to keep participating in SAYE, while protecting them from any adverse FX rate movements during the time between initial grant and the point of exercise.
2. Designed and issued clear, concise communications to improve engagement and understanding across all countries
A raft of strategic marketing communications was created in easyJet’s straightforward tone of voice and bright style. Emails, brochures and posters were translated and took into account mixed levels of understanding (pilots and senior managers tend to know more about the alternatives than cabin crew and other staff members).
For the first time, traditional communications were supplemented by easyJet’s internal social network, Facebook’s Workplace. With a young, tech-savvy and mobile workforce, this channel has proved extremely popular since its launch in 2018, with over 90% of employees signed up. Workplace works like Facebook so the platform is instantly familiar, easy to use and conversational. easyJet encourages “word of mouth” style social media conversations with employees sharing information about their enthusiasm for and participation in share plans. This informal approach has been particularly effective for easyJet’s crew who prefer it to channels like email.
Another new way to communicate was developed to help increase understanding beyond the UK. Local coordinators were given training to act as “champions”. They were on-the-ground go-to-people for share questions. They were given tools to help them explain the positive aspects of the share plans and what current share fluctuations could mean.
The effectiveness of easyJet’s share schemes is measured against the following key criteria:
These are measured by regularly updating, analysing and acting on:
easyJet continually reviews the effectiveness of its share plans using detailed and targeted management information provided by Equiniti. This allows easyJet to analyse its current offerings and its communications strategies for the year ahead, which is how together the team developed an approach to improve effectiveness in 2018.
Award winning share plan
easyJet may have operated share plans for more than a decade but it continues to be as dedicated as ever to ensuring it is a benefit that all its employees value.
The airline is always looking to improve its share offering. This year, that meant ensuring staff understand its long- and short-term value and using technology to make it as easy as possible to participate. As a result of these most recent innovations, participation in easyJet’s share schemes is at an all-time high:
• Significant levels of employee Return on Investment can be consistently evidenced across all easyJet share plans over the past decade; and easyJet also continues to see high returns on its investments across all its share plans, in particular on the SIP and SAYE, via employee retention and engagement levels and via share plan tax efficiencies.
• Over 6,000 new Global Nominee accounts were opened in 2018 providing a simple, meaningful plan participation and share ownership going forward.
• Nearly 10 million shares are currently held in an all-employee share plan, worth £130 million.
• In the UK alone, 64% of employees actively participate and invest in a SIP or a SAYE scheme.
• Overall, 40% of employees are signed up for at least one SAYE scheme, investing nearly £17 million a year.
• Retention levels are market-leading, for instance, at some of easyJet’s longest-standing bases where share plan participation is very high, employee turnover is less than 3%.
• Feedback continues to be positive from unions and employees.
“easyJet is pioneering in its approach to share plans and continues to push the boundaries of how low-cost airlines can engage and retain employees. No new share plans were introduced in 2018 and yet all the data shows that this was a year of incredible engagement, demonstrating the impact of continuing to build momentum using the right technology and communications.”
Phil Ainsley, Director of Employee Services at Equiniti
“Our share plans are already highly effective in helping achieve our objectives and we are always working to make them work even harder. This has been a year of innovation for easyJet’s share plans as we continue to improve our offering to our employees, and it’s clearly leading to an even more attractive share proposition. After all, it is no mean feat to have our highest participation levels ever, 13 years after we first introduced shares to the workforce.”
Matthew Newman, Reward Manager at easyJet
Best all-employee international share plan
Best plan effectiveness
Best overall performance in fostering employee share ownership
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