WHAT ARE THE ADVANTAGES FOR THE COMPANY?
Share awards are a useful incentive for attracting and then retaining top talent.
For RSUs:
Companies can save money up front, as they are offering deferred compensation.
Administration costs are relatively small, as shares are not being tracked and recorded prior to vesting.
Shares will only be issued at the point of vesting, which helps to delay dilution.
WHAT TYPE OF COMPANY DOES THIS SCHEME BEST SUIT?
Just as share option schemes are most closely associated with startups and up-and-comers, share awards tend to be more common among large and established businesses. Options are popular when a company’s limited financial resources are tied up in getting off the ground, whereas established companies will be in a position to, for example, offer more attractive salaries when recruiting and therefore don’t need to fall back on offering options in the same way as newer competitors. On a similar point, a new company has no track record, so its shares may or may not be attractive in the future, whereas an established company is more of a known quantity and as such its shares will have a value in the here and now.
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