Businesses Making Good Use Of Employee Benefit Trusts

Most senior executives and employee reward and benefit leaders across privately-owned and publicly listed UK-based companies are already making good use of employee benefit trusts (EBT), reveals new research* from Ocorian, the specialist global provider of services to corporates – but the majority believe they will need additional external support for employee incentive plans in the near future.

Nine in ten (90%) of senior executives and employee reward and benefit leaders feel that their company is using its EBT effectively, compared to just one in ten who say they aren’t.

The study from Ocorian reveals which particular benefits of EBTs employers are using most. More than nine in ten (93%) respondents say their company uses EBTs to hedge their future commitments to deliver shares to employees, and 95% say they’re being used effectively to manage the administration and costs of major vesting events.

When it comes to using their EBT for off-market purchases, over half (58%) of senior executives and employee reward and benefit leaders say they already do this. The remaining 42% say they have considered doing so.

However, Ocorian’s UK study reveals that companies are looking for extra support when it comes to managing their employee incentive plans. Almost three quarters (72%) of senior executives and employee reward and benefit leaders admit that their company currently outsources all administration support for their employee incentive plans externally, compared to around a quarter (26%) who manage this internally.

But this is set to grow with over three quarters (78%) of respondents predicting that their company’s use of external support will increase over the next two years, including 25% saying there will be a dramatic increase. This compares to 18% who say it will stay the same and just 3% predicting less use of external support.

The main reason for using external support to operate their company’s employee incentive plan is to improve the service levels for participants in the plan. Keeping costs down, and the additional functionality of providing a portal for participants were the second and third reasons. The fourth benefit given was that for many organisations, the sheer size of the plan means that external support is necessary in order to effectively manage and run the plan.

Brendan Dowling, Head of Employee Incentive Services, Ocorian said: “Our new research indicates that senior executives and HR leaders are clearly getting it right when it comes to maximising the potential that employee benefit trusts can bring, but are seeking extra professional support and advice when it comes to employee incentive plans."

"They understand the benefits that these programs can bring, but operating them in an efficient, resource-effective way can be challenging for in-house teams. At Ocorian, we have a dedicated team with a depth of knowledge and technical expertise that can ease the burden of administering employee incentive schemes.”