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Making The Most Of Your SIP

18 November 2021

2021 ProShare Conference

What do successful Share Incentive Plans (SIPs) look like, and how are they best communicated? An EQ-moderated session at the 2021 ProShare conference explored best practice and offered some valuable tips.

“There's been a shift in the way that SIPs are communicated,”

“There's been a shift in the way that SIPs are communicated,” says Jennifer Rudman, EQ Industry Director, Employee Share Plans. “It’s less about simply offering another reward and more about engagement and getting employees involved in company strategy.” Jennifer was speaking at the 2021 ProShare Conference, and her words were very much backed up by the panel for an EQ-moderated session called ‘SIP in the Spotlight’.

Marianne Phillips, Assistant Company Secretary at Wickes Group, explained how the new Wickes SIP was set up primarily to celebrate the Group’s listing on the Stock Exchange at the end of April 2021. “It was a really good way to thank colleagues, reward them for all their hard work and engage them in the future success of the business,” she says. “We've got a standard plan and we chose to use the free share award. It was the best fit for our population, many of whom are low-wage earners. We didn’t want them to have to contribute to be part of it and everybody who was employed on the listing date was awarded shares up to a certain value.”

Having strong communications channels in place also made the plan easy to explain. “We put out a letter from our CEO on the day we demerged (from Travis Perkins), telling them about the awards and when they would receive them. Our colleagues were very excited about the listing and even more excited when they knew they would be receiving free shares.”

There's been a shift in the way that SIPs are communicated, it’s less about simply offering another reward and more about engagement and getting employees involved in company strategy.

— Jennifer Rudman, EQ Industry Director, Employee Share Plans

The Scheme Sells Itself

BAE Systems has a reputation as a pioneer in SIPs, having originally launched in 2005 and is now offering free, partnership, matching and dividend shares. “For the past 17 years, we’ve given employees free shares each year on an evergreen opt-out basis,” says Alison Miller, Share Plans Manager at BAE Systems, and another contributor to the session. “So someone who has received all 17 awards will now have more than 2,700 shares worth approximately £15,000.” Unsurprisingly, take-up is almost 100%.

“We find the scheme basically sells itself and, as we only offer the SIP – we don’t have an SAYE share plan – the messaging that goes out is straightforward and easy to understand,” adds Alison. “The SIP is explained as part of the induction process, and new employees receive a welcome email showing how they can sign up immediately. But because of the success of the scheme, a lot of its continued momentum is now down to word of mouth.”

Six SIP Tips From A Trustee Perspective

Wendy Butcher, Head of Share Plan Trustee Services at Equiniti Share Plan Trustees Limited, also joined the session to offer six tips:

  1. Work closely with the trustees and the plan administrators, especially during the set-up phase, to make sure that all of the routines are in place, especially with payroll colleagues.
  2. Regular maintenance files are absolutely essential.
  3. Where a company is active in acquisitions, good governance around deeds of adherence is a must to make sure that tax-advantaged status is retained.
  4. Inviting newly eligible employees and communicating with them as part of their induction process will really help.
  5. Focusing on the profile of the SIP within the company is important.
  6. And of course, a steadily increasing share price is going to help with word of mouth and those gains expectations.

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