Share incentive schemes
Many South Africans cling to share incentive schemes as a remunerative tool. From an employer’s perspective, a share scheme should create alignment with employees and be a tool for retaining talent, particularly at senior management level. From an employee’s perspective, it is often a way, in growing a business, to increase one’s wealth and participate in the fortunes of the business.
Unfortunately, the schemes available, and the methodology behind selecting the appropriate structure, are often misunderstood. The issues are complex, and parties often don’t focus on the commercial outcomes they are seeking to achieve.
As a result, structures often do not adequately deliver on the goals the parties had in mind. The two most obvious aspects in which share schemes can be costly is if the tax implications of the structure are not properly planned, and/or if the accounting treatment is prejudicial to the employer company.
One is therefore well advised to utilise a team that understands how to realise the commercial outcomes sought, as well as the tax and accounting implications.
Our team will expertly guide parties on such schemes, from the simplest structures through to developing more complicated structures to achieve specialised outcomes where required.
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