CEO - Shareholder Services (UK)
Employee share schemes are a vital tool to help solve some of the most pressing challenges that companies face worldwide. This year’s EQ Shareholder Voice survey reveals that employee shareholders want support from their employers to deal with the cost-of-living crisis, and many say shares would help.
During the pandemic, giving shares to employees worked well for many companies wanting to thank staff for their hard work without impacting cash flows.
It could work again, alongside other measures, during the cost-of-living crisis. In our first article, we discuss efficient ways to do this that include using management information to target the hardest-hit; and supporting vulnerable employees - something EQ has invested much in recently. We even discuss how companies could auto-enrol staff into share schemes to maximise the huge potential benefits for staff, companies and society.
Recent research shows share schemes can help tackle the urgent problems of slow productivity growth; spiralling inflation; staff retention; and corporate performance. Then there’s the long-term confidence and financial resilience share ownership can foster when coupled with high-quality education from employers - another key finding from this survey.
This is the second EQ Shareholder Voice Report, and it builds on the findings from last year to deepen understanding of retail investors’ actions and motivations. The aim is to support companies in reviewing their practice, reporting and communication so they can better harness the opportunities and respond to challenges.
The report is based on a survey of 3,000 individual shareholders in the UK and US, combined with insights from experts and companies.
Building long-term resilience
The last 12 months have been unkind to many private investors. Pandemic after-shocks, soaring inflation and the Ukraine war have rocked markets and created a sense of extreme uncertainty for the uninitiated. Our survey revealed a wave of new investors who are feeling uninformed and out of control – and issuers could do much to help educate them.
But 96% of these jittery investors are not employee shareholders.
The data shows that employees have proved highly resilient and active since the start of the pandemic. This comes from the confidence that stems from knowledge about their company, and from employers’ education programs. Companies have shown great resolve in boosting their employees’ resilience, and we hope they can continue and expand these efforts.
It will be challenging. Many retail investors of all types are dissatisfied with communications from listed companies - much more so than a year ago. This is not surprising given people’s tendency to question what went wrong when their portfolios plummet. But it still highlights the importance for issuers of maintaining a laser focus on communication and education – and how it can leave people floundering if they don’t.
Helping shareholders use their voice
In other articles, we look at the continuing growth of interest in environmental, social and governance (ESG) investing - despite backlash against it from some politicians in the US and investors concerned about performance. We look at how forward-thinking companies are engaging with retail investors on the issues.
Plus, we discuss the long overdue prospects for digitisation of share ownership in the UK. Low levels of automation are hindering most retail shareholders’ right to vote on corporate resolutions, and we support the changes needed to promote digitisation throughout the voting process.
Some brokers contend that individual investors only care about financial performance and not voting. But our data and our experience show they do care. They passionately want a voice. We want to help give it to them.
As a leading share registrar in the UK and US, we want to keep bringing ideas and insights to bolster our industry and strengthen wider society and economies. This year’s report shows how companies can engage with retail shareholders for mutual benefit, if they choose to - and we want to keep helping them do that.