Equiniti Ezine November 2013

EZINE > NOVEMBER 2013 INSIDE THIS ISSUE: PERSPECTIVE ● Regulatory changes spell a busy 12 months for company secretaries ● Extending our offering with the acquisition of Killik CLIENT FOCUS Equiniti clients among winners at ESOP awards 10-MINUTE GUIDE Flexible Benefits UPDATE ● Equiniti and Orient Capital work in partnership for the Office of National Statistics ● Equiniti Data Services exhibits at the Institute of Revenues, Rating & Valuation annual conference

PERSPECTIVE

EQUINITI EZINE > NOVEMBER 2013

John Heaton, a consultant with Equiniti, looks forward to a busy 2014 for company secretaries

CRYSTAL BALL GAZING What is on the agenda of the company secretary in the next twelve months?

To paraphrase Donald Rumsfeld, let’s take a look at the ‘known knowns’ and the ‘known unknowns’ as well as having a stab at the ‘unknown unknowns’.

Top of the list of ‘known knowns’ are the changes to executive remuneration reporting and the requirements for the policies to be put to shareholders. Many of you will already be closely involved in the planning for both of these aspects. The new Directors Remuneration Report needs to be sub-divided into policy and implementation, covering not only the salaries and bonuses, but also payments on loss of office. These need to be put to the vote by all companies whose financial year begins on 1 October 2013 at the next AGM after that date, and at least every three years thereafter. This is unless the resolution is defeated or there is a change

of policy, in which case they will need to be put to the shareholders at the next AGM. The same applies to the changes to the Strategic and Directors’ Reports, which come

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in at the same time. Both these changes are sponsored by the Department for Business, Innovation and Skills (BIS), as is the amendment of the TUPE Regulations expected to come into force in January 2014.

BIS has a number of other things in the pipeline – the ‘known unknowns’. Also on the reporting front, a call for views on corporate (social) responsibility recently concluded and the results are promised in December 2013. During 2013, BIS has consulted on Transparency & Trust – suggesting a central registry of beneficial interests, held at Companies House – Employment Agencies and Whistleblowing, so we can expect proposals on all of these at some time next year. There is also a current consultation on Company Filings, which concluded on 22 November, which contains a wide range of detailed suggestions. Equiniti has commented on this and further details will be communicated shortly. Hopefully, individual company secretaries have looked

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PERSPECTIVE at the document as it could have a significant (beneficial?) impact on workloads, particularly in respect of subsidiary company filings.

Finally in the UK, following its review into the effectiveness of the Listing Regime earlier in 2013, the FCA has published its formal response to that consultation, which includes a requirement that, where a listed company has a controlling shareholder (over 30%), the election or re-election of an independent director must be approved by a resolution of all shareholders and of all independent shareholders. This will present challenges and Equiniti is looking at the proposals in detail at the moment. A further consultation has been issued covering other changes, but this one is only subject to formal approval by the FCA board and it intends to have the final rules in place by mid-2014.

Turning to Europe, the list of ‘known unknowns’ is a long one, but let’s start with an ‘almost certainly known known’. Subject to agreement to the Central Securities Depositaries Regulation, T+2 settlement on traded securities will be mandatory by 1 January 2015 and a project sponsored by the Bank of England and led by Euroclear is looking at the implications and timing for the UK –

EQUINITI EZINE > NOVEMBER 2013

likely to be in autumn 2014. Equiniti is involved in this process and monitoring it closely and will keep you informed. It is hoped that the same regulation will bring clarity to the subject of dematerialisation and we are waiting with bated breath!

We are also waiting for the exact implications of the announcement in last year’s budget on the removal of Stamp Duty on transactions in emerging markets. It is due to come into effect from 6 April 2014 but an awful lot of work on the technicalities is needed if this is to happen.

There are a number of EU initiatives which, had we been writing this a year ago, would have featured on the same list but have not seen the light of day. Whether this is because the need for them has been re-thought or, more likely in my view, that they have been temporarily displaced by more urgent priorities remains to be seen. They include a roadmap on share ownership, amendment to the Shareholder Rights Directive (revisiting the rights of indirect investors?), initiatives on gender and other diversity, changes to the Securities Law Directive (including the sections relating to transparency which may cross over with the BIS initiative referred to above) and further enhancements to corporate governance,

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including guidance on legal certainty relating to investor cooperation. This is a wide-ranging list that could have profound implications for the UK. However, as the next steps will be draft proposals and consultation, there is no likelihood of that impact being felt in 2014 (or 2015).

‘Unknown unknowns’ are, by their nature, tricky to predict but, peering into the murky crystal ball, one can see hints and threats of enhanced shareholder identification requirements from an anti-terrorism/antimoney laundering perspective, stemming from across the Atlantic. The spectre lurked in the background when we started looking at the implications of FATCA and appears to have been avoided, but it would not be surprising if it re-emerged in the coming year.

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PERSPECTIVE

EQUINITI EZINE > NOVEMBER 2013

As Equiniti acquires Killik Employee Services (KES) we find out more about the enhanced offering for clients

JOINING FORCES Equiniti is continuing to evolve its offering to clients through the acquisition of organisations that can enhance the scope and quality of service we provide. With this in mind, Equiniti recently acquired KES, an independent share plan administrator specialising in executive & global share plan management services launched

by Martin Osborne-Shaw. Martin explains: “Executive and Global employee share plans are infinitely variable, complex and sensitive, so we’ve had to build flexible, functionally rich systems that can cater for this. In doing so, we’ve recruited, trained and developed a talented team of people who have carved a real niche in the market and helped us to become one of the largest independent administrators in the UK,” he says.

Killik’s success speaks for itself. From Martin setting up the business in 2000, it has grown steadily to include an impressive portfolio of

We have developed comprehensive, customisable systems with user-friendly interfaces that employees find easy to understand.

Martin Osborne-Shaw

clients and 40 employees, all of which have joined Equiniti following the acquisition. “Now that KES is part of Equiniti, the proposition we can offer clients remains focused on our core strengths but has been greatly enhanced,” Martin says. “Executive share plans by definition tend to be more complicated but we look to

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make things as straightforward for our clients as possible. We have developed comprehensive, customisable systems with user-friendly web interfaces that employees find easy to understand. We tailor these systems to our clients’ needs, which means we maintain a very close relationship with the client,” says Martin.

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PERSPECTIVE Killik’s technological offering is already proving to be a real asset to Equiniti, sitting within a robust IT environment that allows it to integrate with existing data portals or sit as a stand-alone. “Equiniti benefits from our dedicated technological expertise that supports the platform and we have ambitious growth plans,” says Martin. “Equiniti will help us with that part of our strategy which would have been very difficult to achieve if we had stayed as Killik Employee Services.”

Now that KES has become part of Equiniti, clients can continue to expect a tailored offering that is built around their specific requirements but with greater capability to deliver a more rounded service within the Equiniti environment. Bringing its 13 years of expertise in delivering share plans to senior executives and specialist employee populations, its strengths on the technology front means that clients will remain firmly at the heart of the operation, something that both Equiniti and Killik see as the most important thing for business. “We’ve always been renowned for our levels of service and how we can offer bespoke arrangements for our clients,” says Martin. “Now that we will be doing this in a larger environment, we will take a controlled approach, continuing to focus on these core

EQUINITI EZINE > NOVEMBER 2013

principles so that our combined client base will continue to receive the high level of attention they have come to expect from KES.” The transition across to Equiniti has gone really well: “The getting to know you part has gone very smoothly, as I knew a lot of people here from the days of Lloyds TSB registrars and have great respect for their knowledge and experience,” Martin says. “This has helped to accelerate the processes we need to undergo to get fully migrated. That’s our main focus for the moment, and once we’ve successfully achieved this, then we’ll be looking at implementing a sustainable growth plan.”

IF YOU WOULD LIKE MORE INFORMATION on this topic please contact your relationship manager

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CLIENT FOCUS

EQUINITI EZINE > SEPTEMBER 2013

Equiniti clients Edwards Group, IGas and Pearson among the winners

CLIENTS WIN AT GLITTERING ESOP CENTRE AWARDS CEREMONY We are proud to announce that Edwards Group, IGas and Pearson have all won top awards at this year’s ESOP Centre Awards.

The winners were announced at the annual ESOP (Employee Share Ownership) Centre’s dinner in London on 6 November where their accolades were collected at a prestigious ceremony with guest of honour Otto Thoresen, Director General of The Association of British Insurers.

Nominated and entered by Equiniti, Edwards won in the category ‘Best International Share Ownership Plan (over 1,500 employees)’ with their detailed all employee plan launched within an 8-week time scale and achieving take-up rates of 61% in the UK and 43% overseas.

IGas won in the category ‘Best Employee Share

Edwards Group, IGas and Pearson won awards at the ESOP Centre Awards

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EQUINITI EZINE > NOVEMBER 2013

Ownership Plan (fewer than 1,500 employees) achieving a staggering 75% take-up rate with their generous and innovative matching share ratio scheme.

ESOP CENTRE AWARDS

2013

FINALISTS

Following a successful introduction of the new category, ‘Best all-employee share plan communications’, Pearson won this category with their outstanding communication strategy and execution.

Best Employee Share Ownership Plan (fewer than 1,500 employees) This year two entries were selected as finalists in this category. These were: ASOS, nominated by Capita, and IGas, nominated by Equiniti.

Phil Ainsley, Managing Director, Employee Benefit Solutions at Equiniti said: “It is fantastic to be part of the team that delivered for those clients who have won these awards. The other nominations were of a very high calibre so it is real credit to everyone involved who worked so hard to ensure the schemes launched successfully and seamlessly.”

The ESOP Centre has supported broad-based employee equity schemes for more than 20 years. For the last twelve years, the prestigious Centre Awards have highlighted best practice case studies which motivate and inspire other companies in the sector.

Best International Share Ownership Plan (over 1,500 employees) The finalists for this year’s main award were in alphabetical order: ARM Holdings, nominated

by YBS Share Plans, Edwards Group, nominated by Equiniti, and Rio Tinto, nominated by Computershare.

Best all-employee share plan communications Following the successful introduction of this award last year, the three finalists were: Morrisons, nominated by YBS Share Plans, Pearson, which submitted its own entry, and Telefonica, nominated

by Global Shares.

IF YOU WOULD LIKE MORE INFORMATION Please contact John Daughtrey on 0792 110 5629

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10

MINUTE GUIDE

EQUINITI EZINE > NOVEMBER 2013

When it comes to employee benefits schemes, it pays to be flexible

FLEXIBLE BENEFITS A Flexible Benefits scheme is a form of salary sacrifice. It allows employees to consider their lifestyle and make choices regarding whether or not to forfeit some of their salary before tax and/or National Insurance is deducted. The most popular products generally included in these schemes are insurance products, mobile devices and government backed initiatives, such as Childcare Vouchers, Cycle to Work schemes and pension contributions.

Having a full flex scheme has the following benefits for the employer as well as the employee.

For the employer

A well thought out scheme can be a useful tool for engaging employees with your organisation’s brand, provided that the scheme’s design and benefits choices reflect the company’s ethos. This can be further

strengthened if you include employees in the design of the scheme to ensure that the products will provide the workforce benefits.

There can also be significant cost savings on secondary National Insurance, which can then be reinvested in the cost of running the scheme to make it as cost effective as possible.

Corporate paid benefits, such as Private Medical Insurance, Health Screening or even a company car scheme could provide potential cost benefits if incorporated into the flex platform.

By including these benefits, the burden of managing these schemes is significantly reduced and gives the opportunity to view all of these benefits in one place.

For the employee

A well-designed flex scheme will enhance an employee’s benefits package by giving them a wide range of benefits, such as saving more

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10 MINUTE GUIDE Equiniti currently administer benefit schemes to over three million employees, with over 70,000 specific to flex.

EQUINITI EZINE > NOVEMBER 2013

three million employees, with over 70,000 specific to flex. Our portals are award-winning, and by bringing all of our services together, our clients’ employees can view and transact on all of the products on offer either by logging in once or being directed straight from your intranet.

for the future through pension contributions or developing a new skill through a matched learning fund. The cost savings are also a benefit for employees as most of the time a ‘like for like’ benefit will cost less through their flex scheme than if bought direct through the same provider.

Although Flexible Benefits in their own right are a powerful tool, with the number of employee benefits available and increasing all the time, the impact can be significantly enhanced when added to the other products available. These include quick savings such as discount websites and longer-term investments like Workplace ISAs.

The complete picture

Equiniti can support flexible benefit needs for both employers and employees. We currently administer benefit schemes to over

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EQUINITI EZINE > NOVEMBER 2013

UPDATE

ALL OF THE LATEST INDUSTRY NEWS FROM THE EQUINITI GROUP

STATISTICALLY BETTER

REST OF THE WORLD INSURANCE COMPANIES

BANKS

£33.6bn

£109.2bn

Equiniti and Orient Capital worked together to provide in-depth analysis of beneficial shareholdings for the ONS Equiniti and Orient Capital teamed up to deliver a bigger, broader and more detailed analysis of beneficial shareholdings for this year’s ‘Ownership of UK Quoted Shares’ bulletin by the Office for National Statistics.

£935.1bn

PUBLIC SECTOR

£44.1bn PENSION FUNDS

BENEFICIAL OWNERSHIP OF UK SHARES

BY VALUE IN 2012

Equiniti Investor Analytics and Orient Capital (OC) were appointed in partnership by the Office for National Statistics (ONS) in December 2012 to identify and provide analysis of the beneficial shareholdings in a sample of UK companies for its 2012 survey. The results of this biennial survey are used to improve the sectoral breakdown of the ownership of shares in the National Accounts and to assign the dividends received to the correct sector of ownership.

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VALUE OF THE UK STOCK MARKET IN 2012

£82.7bn

£1,756.3 billion

INDIVIDUALS

£187.2bn

PRIVATE NONFINANCIAL COMPANIES

£39.8bn CHARITIES, CHURCH, ETC

£10.7bn UNIT TRUSTS

£167.9bn

INVESTMENT TRUSTS

£30.7bn

OTHER FINANCIAL INSTITUTIONS

£115.3bn

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UPDATE During the project Equiniti and OC identified and analysed shares to the market value of more than £767bn and the statistical bulletin ‘Ownership of UK Quoted Shares’ was released by the ONS on Wednesday 25 September.

Equiniti had previously assisted the ONS with the 2010 Share Ownership Survey and by working in partnership with OC for the 2012 survey was able to enhance the scope of the analysis in consultation with the ONS. Significant improvements were made to the 2012 survey, primarily by using OC’s sophisticated analysis system, coupled with a unique collaboration of resource between both knowledgeable and experienced teams.

To compile the survey, Equiniti and OC sought each company’s consent to participate, attempting to include as many companies as possible that had been analysed in the 2010 study for continuity. For the latest survey, companies were further selected to reflect the industry splits by value of the FTSE350 index to attempt to provide a representative sample of the market as a whole.

The Equiniti and OC analysis teams analysed shareholders at beneficial shareholder level, identifying shareholder accounts at a beneficial

EQUINITI EZINE > NOVEMBER 2013

We are extremely pleased with the contribution of Equiniti and OC to the work on share ownership this year. owner type and geographic level. The analysis of the full register allowed an average of 90.7% of a company’s total market value to be considered. Reporting on non-pooled nominees as part of the ‘combined’ pooled and non-pooled results (i.e. analysis of the full share register), meant Equiniti and OC were able to present a second set of results to the ONS, another improvement on the 2010 study when Equiniti was tasked solely to update the analysis of pooled nominee accounts last conducted in 1997.

The ONS regularly engages with users of the survey to gain feedback on the results of the survey and what it has highlighted. In late 2012, a Share Ownership User Group was set up to take key users and stakeholders through the methodology used for the project.

In October 2013, Equiniti and OC jointly presented their contribution to users at the second annual meeting.

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Equiniti worked closely with the ONS during the project, holding calls or meetings most weeks during the analysis period, as well as hosting a session for one of the survey users, the Association of British Insurers to discuss the project and methodology in respect of its concerns over the classification of insurance holdings. Recommendations made by Equiniti after the 2010 study were incorporated into the 2012 project in agreement with the ONS. Louise Rutter, Manager, Investor Analytics, said: “Equiniti and OC are extremely pleased to have contributed to this important survey, building on our partnership with the ONS and we hope to once again be considered to supply aggregated shareholding data for future Share Ownership Surveys.”

Harry Duff, Statistician at the ONS, said: “We are extremely pleased with the contribution of Equiniti and OC to the work on share ownership this year and with their help and support at the User Group meeting in October.

The team working with us have been extremely helpful throughout the project.”

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UPDATE

EQUINITI EZINE > NOVEMBER 2013

EXHIBITING EQUINITI

Equiniti Data Services attends prestigious revenue collection and tracing industry event Equiniti Data Services recently exhibited at the Institute of Revenues, Rating & Valuation (IRRV) Annual Conference.

Held at the Telford International Centre between 2 and 4 October the event is recognised as the foremost professional event for the revenue collection and tracing industry and attracts more than 400 delegates and high profile speakers from government departments.

Duncan Stevens, Managing Director of Equiniti Data Services, said: “It was a well attended event with some very interesting speakers. Our exhibition stand was really popular and we met several new potential clients who will benefit from our services.”

2014 AGM MEETINGS The AGM team is now scheduling and planning for the forthcoming 2014 meetings season. If you haven’t already done so, please can you email your proposed date to Helen.Wilson@equiniti.com

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