Share Schemes

Nora Ward and Niamh CoyneEmployment, Pensions and Benefits Group

M-7618560

Opportunities In a recession

Geo Breakfast Seminar 23 September 2009

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Outline of Discussion

• Share Schemes – Recent trends in Irish Market

• Share Schemes Menu

• Market case-studies

• Conclusion

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Share Schemes – Recent Trends in Irish Market

• Corporate Governance

• Shares v Cash

• Options v LTIPs

• Performance indicators TSR v EPS

• Underwater options/share awards

• Financial institutions and impact of State Guarantee on equity incentives (CIROC)

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Share Schemes – Recent Trends in Irish Market

• Disclosure of directors remuneration

• Commission on Taxation Report

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Share Schemes – Opportunities in a recession

• Employer benefits of Share Schemes

• Employee benefits of Share Schemes

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Employer benefits of Share Schemes

• Minimal cash cost to employer

• Costs tax deductible

• Currently no employer’s PRSI

• Increase productivity with performance targets

• Incentivise staff

• Align employee and owner’s interests

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Employer benefits of Share Schemes

• Potentially valuable awards

• Awards at bottom of market maximise gain

• Tax efficient schemes reduce tax payments

• Low risk for employee

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Share Schemes – Menu

• Options

– unapproved option scheme

– Revenue approved option scheme

– Revenue approved SAYE scheme

• Share awards

– Revenue Approved Profit Sharing Scheme

– clogged shares

– forfeitable shares

– restricted stock units (RSU’s)

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Recent Market Case-studies

• Pay cuts and awards

• New schemes/grants

• SAYE schemes

• Underwater options

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Conclusion

• Recession problems

• Share scheme solutions