Shropshire Business Talk: Growth shares are a great incentive

That’s the message from Sarah Hartshorn at Dyke Yaxley Chartered Accountants in Shrewsbury, who said the shares were a great incentive.

“Existing shareholders’ interests would only be diluted above that level which would generally be set at a chosen figure above the market value of the company on the date the shares are awarded. As there will only be a return above the valuation hurdle this means they can be purchased by employees for a lower price.”

“The shares tend to work best as exit incentives, but hurdles can set before options are exercisable. Although there may be good leaver situations, growth shares are usually forfeited by employees if they leave the company. When an employee acquires the growth shares they are of course exposed to the risk and rewards of share ownership.”

“On disposal of the shares, they are subject to Capital Gains Tax and Business Asset Disposal Relief if the conditions are met. These tax rates are topical with the back drop of the pending budget on 30th October.”

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