NEWSPAD editor Fred Hackworth won the inaugural Laurie Brennan award for ‘astounding’ achievement in recognition of his campaign for Roadchef beneficiaries.
He received his award from Paul Jackson of the Investors’ Chronicle, the leading national journalist on employee share ownership, at the reception which concluded the British Isles symposium (March 7 2019).
True to form newspad carried a front-page lead on the national story of the day affecting the crown dependencies, calling out the ‘malcontent’ MPs who were trying to make trouble. Fred’s lead story was accompanied by an editorial by Helen Hatton – former Jersey and Isle of Man regulator. She put the record straight explaining that Jersey had met OECD standards on transparency. “The beneficial ownership of all Jersey incorporated companies is available to law enforcement locally and internationally.”
Fred’s thoughts on Esops and reporting them:
How can we widen and deepen the adoption and use of employee share ownership?
First, we need a national government-led campaign to ‘nudge’ smaller quoted
companies and SMEs into offering their employees the chance to participate in all-employee share ownership plans, because it is in these sectors that employee share ownership is weakest. The very largest UK companies, mostly in the FTSE100, know all about it and should be left to work out themselves how to increase in-house participation rates in their employee equity programmes.
Secondly, Treasury/HMRC could revive the Share Incentive Plan (SIP) by allowing the full Income Tax and NICs relief to apply after three years of holding the shares – and not five years, as at present. This is because many employees these days won’t participate in Esos if they have to wait for five years to get the tax benefits; most likely because they won’t be working for the same employer by then.
Stemming from that, we should increase the portability of employee shareholdings, instead of asking mobile employees to cash them in when they change jobs. A way forward would be to force the company to buy, on behalf of the parting employee, the same value of shares (as those held in the leaver company plan) and place them in the employee’s new company and for HMRC to accept those new employee shares as having the same status (in years of participation status) for the normal tax advantages.
Government should make all-employee participation mandatory in each company’s main employee equity plan before allowing any of its other share plans (e.g. performance or management-only plans) to qualify for tax relief.
Long-term employee plan participants should be permitted to spread some of their equity investment risk into partially diversified collective funds, as in France, where their employee investment funds (FCPEs) operate as collective investment schemes for workplace savings. Employers often award matching shares to employees who take up this option. Such an optional facility would help overcome ‘all your eggs in one basket’ fears about being a long-term Eso investor in your employer, in case its share price collapses some years on.
Which employee share ownership story have you most enjoyed reporting on and why?
It has been heartening to have received many encouraging letters and emails from the original participants in the Roadchef Esop, as the Centre continues to fight on their behalf for payment of the High Court ordered compensation which they are still due, five years after the ruling in their favour. Newspad tries to carry a new story, at least every two months, centred on the battle between lawyers, HMRC, politicians and others over the compensation pot. These former motorway services staff needed someone to speak up for them, as the Centre and I have tried to do.
How does reporting on employee share ownership differ from reporting on other financial topics?
Reporting employee share ownership events, or developments, is often very technical and
there is little information ‘spoon feeding,’ or deliberate spin, whereas these days financial reporters in wider spheres find themselves buried in media releases put out by corporate PR advisers. Reporting Eso involves assessing facts, like employee plan participation rates, regulatory changes, or new executive equity reward scheme details. The bugbear of general financial topic reporting is trying to decipher the hidden agenda of some advisers who tip off journalists about specific failings, or over-optimistic assessments of prospects in various companies.
What do you think will change about employee share ownership over the next five years?
The future of all-employee share ownership over the next five years may well depend on whether the developed world can avoid another financial recession of the intensity of the 2008-9 worldwide banking crisis. Funding pressure will rise in developed economies on the quite generous scale of the tax and/or NICs reliefs currently allowed under various tax-approved schemes, such as SAYE, the SIP, and the key-employee share options based Enterprise Management Incentive. An incoming Labour government would certainly revisit the already near £1bn in tax and NICs relief afforded to the mere 27,000 EMI participants.
What has been the most important development in employee share ownership during your career?
The introduction of both the SIP and EMI by the then Labour chancellor Gordon Brown in the year 2000-1 was undoubtedly the most important development in employee share ownership during my ‘watch.’ Mr Brown said he had stimulated employee share ownership because he wanted to improve the UK’s mediocre productivity rates, but the jury is still out over whether the SIP and EMI have made a difference on that front. The advent of the SIP has made participating employees think harder about if and how often they should buy the company’s shares, whereas the structure of SAYE-Sharesave has tended to encourage participants to sit back, once they have signed the savings contract. SIP has made companies think hard too about to what extent they should award free matching shares to employees who buy partnership shares. EMI has transformed the incentives front in UK gazelle-type SMEs, of whom almost 10,000 have unvested EMI options in play among their key employees. The raising of the annual employee Eso investment limit was a big moment too.
Which words or phrases do you most overuse?
I’ll be with you in a minute….
What is your most treasured possession?
An upstairs study, from which I can see the sea.
If you were to die and come back as a person or a thing, what would it be?
A witty playwright like Tom Stoppard.
Which talent would you most like to have?
I’d like to have been a good party pianist, but it’s my younger son who is the ivory tickler.
Who is your hero of fiction?
Eugene de Rastignac, the young chancer in Balzac’s epic series of novels, known as ‘La Comedie Humaine” about Paris life in the 1820-40s. I was a bit like him when I was a young man about town……