Consultants Ernst & Young and Computershare – the share registration and share plan administration company – have joined forces to explain to UK companies how they will be affected by changes to the treatment of share-based payments put forward by both the UK Inland Revenue and the International Accounting Standards Board.
Computershare says the proposals – and the related tax implications – will affect nine out of ten UK companies in the FTSE-250 index, because they operate executive share and share option plans. “The proposed reform of the corporation tax relief provisions introduced by the Inland Revenue in 2002, combined with proposals for a new International Financial Reporting Standard for share related payments, will change the fundamental landscape of share plan design and operation,” says the Australia-based company.
Ernst & Young and Computershare have drawn up a pair of seminars, to be addressed by experts drawn from both firms. They will cover the profit and loss impact of operating share plans; the funding implications for share plans; and the strategic implications for employers of the changes.
“Companies usually have clear corporate objectives when they introduce employee share plans,” says Sally Russell, General Manager, Global Share Plans at Computershare. “The changes and proposals explained and discussed during the seminars will cause companies to test those objectives, and to question the value their plans will deliver in the future”.
Giles Capon, a senior manager with Ernst & Young added that “this is a period of fundamental change for employers, who will need to fully understand the impact of the regulatory changes that are being introduced around the area of reward. Prior to developing future incentive strategies and introducing new share plans employers will need to properly consider the cost implication for the business and whether it is now necessary to challenge a number of the basic assumptions that have been adopted over the course of the last few years.”