Positive Employee Share Solutions for Global Company

The Client

A global natural resources company with over 90,000 employees and c. US$10 billion EBITDA. Ocorian administer an employee share trust for the client and provide the corporate nominee facility for international employees.

The Challenge

The client had a significant number of employee share awards due to vest and Ocorian worked with them to explore ways in which they could meet their commitment in a cost-effective manner.

Solution

Having evaluated a number of options, Ocorian’s advisors entered into a structured share purchase whereby Ocorian as trustee of the trust purchased the shares over a 30-month period with the aim of ensuring the trust had sufficient shares to satisfy the awards vesting at the end of the award period.

The employee share trust, administered in Jersey, allows the shares that are purchased to be held in trust free of any capital gains tax which is beneficial to a UK plc trying to manage its future share award commitments. An irrevocable trading plan was put in place and the company had the plan approved at board level. Ocorian were not bound by close periods and executed the trading plan in an orderly manner ensuring not to affect the market.

Results

This trading plan was very successful as the price on the date of vesting was significantly higher than the weighted average price the trustees achieved through the structured purchase plan. This led to a cost saving of over £140 million for Ocorian’s client.

The treasury department and CFO of the company were very happy with the outcome and have rolled over the program again to now prepare for the next scheduled release.

Listed companies can significantly benefit from proactive management of their employee incentive arrangements and this is just one such example of how a Jersey Employee Share Trust can be beneficial.