“Our current broker is due to be discontinuing its employee share dealing service and we are currently looking at other brokers’ services.
A number of brokers’ employee dealing service involves the company being set up as agent for the individual employees, with any purchase or sales money being sent by or to the company (not direct from or to the individual). In addition, this service does not offer the ability for the broker to lend the option consideration to employees to enable them to exercise the options prior to sale.
• If you have a similar service, does your company ‘lend’ the option consideration to the employee and, if so, do you charge interest on that loan?
• What arrangements do you have for directors’ option consideration?
• Do you operate a separate bank account in relation to the share sale and purchase monies?
• Finally, do you send any sale proceeds via cheque or electronic transfer?
Any further experiences of employee share dealing services would be appreciated.
Transferring the administration of SAYE Schemes
We are currently considering whether or not to transfer the administration of our SAYE Schemes from Equiniti to another provider. As part of this process I was hoping to be able to transfer the schemes that are currently being administered by Equiniti but I am not sure that this is possible.
Has anyone got any experience of transferring their SAYE schemes and if so, did they transfer legacy schemes and did they experience any difficulties?
Only relevant experience re SAYE schemes is where we have taken over a listed company and inherited their SAYE scheme. As someone has already said, it is not possible to transfer live schemes so we have more than 1 administrator for different schemes at the moment.
Re employee share dealing. We have used the services of Equiniti for employees exercising SAYE at the point of maturity to cut down the time taken for employees to reaslie their money. Generally, we use Natwest Stockbrokers and usually offer their name first if an employee asks how they can sell their shares. We have found their service to be excellent and in line with the FTSE 250 company response previously posted. (I wasn’t sure if YBS meant UBS or RBS – the latter being Natwest). I would have no hesitation in recommending them.
Re: Transferring SAYE administration – we are currently dispensing with Equiniti’s services as our SAYE administrator. Equiniti advised me that Treasury regulations do not permit live SAYE savings contracts to be transferred between banks and that we will have to continue to use them (actually Lloyds Banking Group) as our savings carrier. (I double checked this with Yorkshire Building Society and they confirmed it’s correct.) As we are a small scheme in run out following a takeover, we will not look for another administrator but will administer SAYE ourselves for the remining 18 months.
A word of warning – if you do decide to take the admin work from Equiniti and leave the savings element with them, you will not necessarily continue to have a contractual relationship with Equiniti, as the savings contract is between Equiniti and the employee. We don’t so far seem to be experiencing problems as a result of this; Equiniti seem to be keen to treat this as an exercise in limiting any possible reputational damage.
I’m very happy to talk about this in more detail if that would help and am happy for Equity Culture to give you my email address.
We don’t have SAYE (but do use YBS for our SIP admin) so I’ll concentrate on the share schemes query.
We have, very successfully, used our broker for the exercise of share options.
Whilst the company is legally a party to the service, the benefits of the service outweigh any potential disadvantages (and I can’t think of any disadvantages we’ve experienced).
The broker lends the funds for directors and other participants alike (interest-free) and deducts any withholdings (we advise on the level of withholding) and then sends the amounts withheld to us for distribution to the employing company. Directors tend to only sell sufficient shares to finance the share option and withholdings and then we allot the balance of shares directly into their name.
Then the “profit” (as non-directors usually sell all of their share options) is either remitted directly to the employee bank account that they nominate, or (if a UK employee and an unapproved option) sent to the company to be processed through payroll. Occasionally we pay the UK employees earlier than through payroll and just process the accounting entries in the payroll. Funds sent directly to the employee from the brokers are done on T+3 (and arrive on day 3 so must go by CHAPs). The brokers do charge commission on sales (if the sales proceeds exceed £75k, the rate is 0.25%, so quite good.)
We don’t use any separate bank accounts.
We especially like the use of this service for our “good” leavers as we don’t have to worry about clearing their cheques before a share exercise. Plus the proceeds are sent after withholdings so don’t have that worry either.
Our broker offers a low cost dealing service for employees when exercising options. The individual instructs the sale however proceeds may be split with the option cost being paid to the company with the balance of proceeds going to the optionholder. We do not seek interest on the “loan” treating it instead as a deferred payment.
The same applies for employees and driectors, although we do keep a close eye on directors to ensure the lapse time between exercise and receipt of funds is kept as short as possible.
We do not operate a separate bank account fo share sale andpurchase monies.
Sale proceeds are by both cheque and credit transfer, the former for smaller value trades and the latte for larger value trades.
We have not undertaken a SAYE administration transfer and so have no experience of this. I find Halifax to be pretty efficient in what they do fr us in that regard.
In both my present position and previous position, I have used the services of NatWest Stockbrokers to provide a funding and sharedealing facility enabling the cashless exercise of options. NatWest have a very simple procedure and will liaise directly with the Company’s broker in respect of placing blocks of shares to ensure no undue pressure on the share price.