As the cost of living crisis bites and inflation rises, research reveals employee share schemes could help the lowest paid.
The EQ Shareholder Voice survey of 2022 shows 73% of of those polled believe employers should offer financial support to help with skyrocketing prices. The preferred option for most, 53%, is a pay rise in line with inflation. But almost one in five would prefer to have shares in their companies.
Graham Bull, head of all employee share plans at EQ, says one affordable option is to offer the hardest-hit employees a combination of free shares, a modest pay rise and a cash sum.
“Many companies,” says Bull, “that were finding it hard to generate cash during the pandemic gave employees free shares to thank them for their hard work and loyalty, and it worked.
“Some even had to reduce salaries, so they gave free shares to compensate. They found this was better than laying people off, and the staff ended up being slightly better off too.”
EQ believes auto-enrolment onto share schemes might help. Not only do the process support employee finances, but could boost productivity. But only if schemes are properly managed.
Tim Brook, business unit lead at EQ HR Solutions, says share schemes succeed if they come with an effective communication programme spelling out the benefits. “If you launch and leave it, you are missing a trick,” he says.
Elsewhere, the survey finds shareholders have maintained their focus on ESG issues. Last year the poll found 13% of shareholders in the US and UK possessed a “desire to influence a company’s behaviour” and was among the top three factors driving stock selection. The latest survey finds that driver has risen to 19%.
Older investors, those 57 years old and above, have increased their interest in “influencing companies, from 4% last year to 15% in 2022.
According to Sally Ahmadi, senior vice president, corporate governance, ESG and executive remuneration at EQ and DF King, shareholders remain undeterred by recent economic volatility cutting the value of ESG stocks.
“So, most investors who want to integrate ESG are in it for the long-term returns,” she says. “Short-term shakeups probably won’t affect their strategy much. There is still increasing pressure on companies around ESG, including from larger investors. Plus, there is lots more disclosure from companies, which is driving greater interest among all investors.”
To find the EQ Shareholder Voice 2022 report, click here.