Launch of Employee Share Schemes to provide industry-leading routes to ownership
Aukett Swanke Group is excited to report that it has launched three plans to increase levels of share ownership by management and staff. These will form an unparalleled recruitment and retention offer which delivers ownership to employees in a tax efficient manner that competitors, who are generally unlisted companies that lack the benefits of a stock market listing, cannot access.
In traditional architecture firms, ownership is unavailable to staff until they reach director or partner level. At that point, there is an expectation they will ‘buy in’, handing over often significant sums. Commonly this ownership stake must be retained until they leave – and must be sold at that point.
More recently Employee Ownership Trusts have developed as an alternative model, with retiring partners lured by tax breaks to hand their company over to a trust established for the benefit of the staff. But these do not provide true ownership to the employees – new staff are told they are part owners on joining, without paying anything to acquire that ownership, and on leaving are no longer considered owners.
ASG’s proposals offer a genuine ownership that EOT models lack, without the inflexibility and lump sum commitment of the old-fashioned partnership type structure.
All Employee Share Option Plan
Firstly, the Company has implemented an All Employee Share Option Plan (“AESOP”). The AESOP entitles all employees to invest between £10 and £150 per month in purchasing shares in the Group from their pre-tax salary. The Group matches this contribution pound-for-pound on the first £50 per month by purchasing Matching Shares for the relevant employee as a staff retention tool. Employees who leave forfeit the Matching Shares acquired within the last three years of their departure, save for a number of specific reasons such as redundancy or ill health.
The Group is delighted to report that in the first month of the scheme approximately 40% of the workforce have chosen to acquire shares in this manner.
Management Share Ownership Plan
Secondly, a Management Share Ownership Plan (“MSOP”) has been created. The Company recognises that the management of the Group’s businesses wish to build an ownership stake greater than the upper limits of the AESOP. Therefore, it invited 34 members of the senior management team to commit to purchasing shares beyond the AESOP limit. 32 of the 34 made a contractual commitment to spend an amount equivalent to between 2.5% and 10% of their gross annual salary on the purchase of Company shares, until such time as each of them own a minimum of either 0.25% or 0.5% of the Company’s issued share capital – though they are free to acquire larger stakes if they wish.
Purchases can be made at any time subject to the Group’s Share Dealing Code and applicable securities regulation, but it is intended that the MSOP purchases will be made approximately quarterly with most purchases expected to begin in February 2024.
Every single director of the Group’s subsidiaries who was invited has signed up to the MSOP commitment, including all fee earning architect directors. All who have expressed an intent have indicated they will be purchasing their shares within their pension plans, as their investments are intended to build long term stakes in the business. This method also allows them to steadily build an ownership stake without tying up existing savings, without taking on any debt, and without reducing their take home pay.
Company Share Option Plan
Finally, the Company has created a Company Share Option Plan (“CSOP”). Pursuant to the CSOP, an aggregate 25,591,666 options have been granted to the 32 members of the management team who have made commitments under the MSOP. These options represent 8.73% of the issued share capital.
The CSOP options vest between the third and tenth anniversary of grant, providing a risk-free route to build additional long term ownership, to those senior staff who have shown their commitment to this goal.
Nick Clark, Chief Executive, commented:
“Collectively these three schemes are transforming the Group’s culture. Last quarter the Group only had six employee shareholders, now there are 70, and I am delighted the schemes have been supported by everyone in a senior management role. Moreover, the commitment to consistent, regular purchases of meaningful amounts of shares, over the coming years, demonstrates to the market our conviction in our new strategy.
Taken together the share ownership schemes are, I believe, the most attractive equity prospect for up-and-coming architects, consultants and engineers in the UK. They will enable us to attract and retain the brightest and best.”
Further details are available in the RNS announcement to the Stock Exchange, available here