Share incentives are commonly used as a recruitment or retention tool by all types of companies. from startups to large multinationals both private and listed. But what’s the difference between share incentives, share schemes and share plans? From LTIPs and MIPs to EMIs and CSOPs – Kathy and Matt demystify the world of share incentives and highlight key considerations for private companies thinking about share incentives for the first time.

Key takeaways:

• A share incentive is a promise to receive a future reward in the form of shares. The reward is normally received by the employee after a period of time that they stay in employment or on the achievement of specific goals.
• Share incentive schemes are a good way of incentivising employees to stay working for a business and to help it grow in value.
  The Enterprise Management Incentive (EMI), Company Share Option Plan (CSOP), Save As You Earn (SAYE) and Share Incentive Plan (SIP) scheme are all HMRC backed share incentive plans. Each of these schemes provides different mechanisms to enable employees to have increases in the value of their shares treated, for tax purposes, like capital gain instead of employment income.
• A Long Term Incentive Plan (LTIP) can mean any type of non-tax advantage incentive scheme that's expected to have a timeframe longer than that for an annual bonus.
• A Management Incentives Plan (MIP) is a similar concept to LTIP, but is limited to senior management and the term tends to be used by companies that have private equity investment in them.
• Businesses need to clarify what they want to achieve and who they want to incentivise when deciding what type of scheme is most appropriate for them.

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Click here to listen to the first podcast in the series: What is an Employee Ownership Trust and how does it work?