Women’s shareholding: an opportunity for growth

Published on: July 25, 2020
Subjects:  Total compensation, Executive compensation, Performance and bonus, Boards of directors and governance

According to a survey by Léger, roughly one out of two women are interested in becoming shareholders in the future. In Quebec, a mere 13.6% of businesses are owned by women.

A variety of medium- and long-term incentive plans (LTIPs) are available to bring you closer to your goal of becoming a shareholder. An LTIP also helps retain key employees, which is essential in this period of labour scarcity, and paves the way for succession planning.

Getting acquainted

To test the waters and attract the interest of employees, there’s nothing better than LTIPs with cash awards that do not dilute share ownership from the outset. For example:

  • A long-term bonus tied to performance goals
  • Phantom shares with a value equivalent to actual stock
  • Stock appreciation rights (SARs) tied to the company’s increase in value

Once the business relationship is consolidated, the employer can consider share-based plans with greater involvement from both parties. Payments from these programs, whether based on phantom shares or actual shares, generally accrue over several years, which creates the desired effect of retention and allows businesses to offer more competitive compensation based on the value of the company.

Marriage: For better or for worse

The ultimate step is buying stocks. Several mechanisms can be considered. For example:

  • Converting options or phantom shares into shares
  • Issuing a bonus in stock
  • An investment by the employee
  • An interest-free loan from the employer

A plan that aligns with industry best practices will retain key employees and guide their actions and decisions for the benefit of the organization and shareholders.

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