Equiniti Ezine October 2014

eZine > octobEr 2014 inSidE thiS iSSuE: pErSpEctivE ● Highlights from the 2014 Employee Services Forum ● Dividend payments step into the spotlight ● Introducing the UK Corporate Governance Code 2014 ● A closer look at the Small Business, Enterprise and Employment Bill 2014 cliEnt FocuS ● BT saveshare - a complex issue made simple 10-minutE guidE ● What enterprise social networks can do for your business updatE ● Employee share plans update ● A winning partnership with Microsoft

perspective

equiniti EZINE > October 2014

This leading industry event attracted attendees from across the marketplace

Employee Services Forum 2014 The 11th Equiniti Employee Services forum was held at The Belfry in Warwickshire on 8 September.

Attended by over 100 delegates, this annual event is a great opportunity for our clients to network, share best practice, listen to presentations and participate in panel sessions.

The hot topics this year were: ■■ Executive

pay - remuneration committee reports, bonuses and LTIPs ■■ Compliance challenges including: FATCA and online filing ■■ Non Executive Directors and shares plans ■■ International share plan launch with client case studies ■■ Communicating complex maturity options (see the BT Maturity article on page 8) ■■ International benefits and technology solutions.

As a leading industry event, the forum always attracts a high calibre audience. This

year’s guest speakers included BT, Pearson, easyJet and DS Smith, as well as several specialist advisors.

Phil Ainsley says: “Our ES forum is an important feature of our annual events calendar and provides a great opportunity to catch up and network with our clients and advisors, so I was delighted that so many people were able to join us. The presentations covered a range of subjects, giving focus to topical employee share plan issues and prompting some detailed and interesting discussions. The feedback that we have received so far about the forum has been excellent, making the event a great success.”

If you would like more information Please contact your relationship manager.

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equiniti EZINE > October 2014

Equiniti’s Director, Share Registration Services, Mark Bullen describes how we’re making paying shareholders easier and more effective

It’s time to talk about dividends In 2013, Equiniti was responsible for dividend payments in excess of £24 billion, across more than 1,100 tasks. Specific activities ranging from Task Planning, Document Design, Technical Advice & Project Management, Process Control and Central Reconciliation were all involved. Our combination of passion and more than 350 years of experience across the team ensured shareholders received the right dividend payments at the right time.

Continually improving service levels is vitally important to us. In response to customer feedback we have changed our processes to include a single point of contact for planning and proofing, whilst more than 1,200 hours have been dedicated to staff training, and dividend stationery has been redesigned to make it clearer and more appealing to shareholders.

Equiniti currently manages 63 DRiP schemes and the majority of these operate a minimum

for their needs. As part of this process, we work in partnership with clients to consciously decide whether the DRiP or Scrip scheme is the best option, or whether moving to a different scheme would have greater benefits.

A number of things need to be considered if a change in scheme is the best way forward, such as: ■■ Can

commission shareholder fee, which spreads the cost more equitably. For 17 clients, we operate Scrip, which has increased in popularity in recent years as PLCs consider the benefits of cash retention.

Working pro-actively with clients is essential to determine which scheme is more appropriate

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existing scheme mandate instructions be carried forward?

■■ What is the best way to manage the residue funds from the outgoing scheme?

■■ What is the optimum balance between cost management and shareholder experience/ shareholder participation?

■■ What are the PLC’s key performance indicators for the new scheme?

The earlier in the process Equiniti’s expertise comes into play, the more value we can add.

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Perspective Our communications have recently been further enhanced after working with specialised consultants and our stationery now has the maximum impact when it reaches shareholders. There are only 15 seconds from the point a shareholder opens their mail to capture their interest and motivate them to act and since revamping our stationery with this in mind we are experiencing significant increases in positive shareholder response levels.

Including an ‘unclaimed monies’ notification has proved a great way to increase shareholder engagement – following a recently improved client campaign - we saw a 200% uptake on the previous dividends. However, there is still more engagement +BACS authorities to gain, as a number of shareholders still prefer the ‘security’ of knowing the dividend has been received via the physical traditional cheque. We recognise there is still work to do to sell the concept of BACS dividend payments to a wider audience and we accept that challenge.

Dividend payments to overseas shareholders are paid via Equiniti’s Overseas Payment Service, directly into nominated overseas accounts in the local currency.

This service is secure, reduces costs for the shareholder and avoids the build-up of unclaimed payments. With such a range of benefits, Equiniti is currently developing a

equiniti EZINE > October 2014

revised promotion of this service to reach out to more overseas shareholders.

For further information on the practical issues around articles of association relating to dividend distributions we have provided a copy of the ICSA Registrars Group Guidance Note.

Innovation is key to our business and with that in mind, there are currently a number of exciting and valuable things in the pipeline, such as value added dividends and payment by mobile. These are just some of the areas that Equiniti is looking into for the future.

If you would like more information Please contact your relationship manager.

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equiniti EZINE > October 2014

The UK Corporate Governance Code 2014 calls for corporate values and culture to come from the top

Setting the tone The FRC has published the 2014 version of the UK Corporate Governance Code, which will apply for financial years beginning on or after 1 October 2014.

The 2014 Code reinforces the need for the board to set the ‘tone from the top’ in terms of corporate culture and values. Within this the FRC has emphasised that key to an effective board is dialogue, which is both constructive and challenging. There is also an increased emphasis on directors’ remuneration and risk management. The main changes are outlined below: ■■ Companies

must state in their financial statements whether they consider it appropriate to adopt the going concern basis of accounting and identify any material uncertainties ■■ A robust assessment of a company’s principal risks should be undertaken with an

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Perspective accompanying explanation of how those risks are being managed or mitigated ■■ A ‘viability statement’ has been introduced whereby companies should state whether they believe they can continue in operation and meet their liabilities, taking account of their current position and principal risks. The statement should specify the period it covers, which should be significantly longer than 12 months ■■ Companies should monitor their risk management and internal controls at least annually, review their effectiveness and report on that review in the annual report ■■ A greater emphasis on ensuring that remuneration policies are designed with the long term success of the company in mind, and that the lead responsibility for doing so rests with the remuneration committee ■■ Companies should have arrangements in place that will enable them to recover or withhold variable pay when appropriate to do so together with appropriate vesting and holding periods for deferred remuneration ■■ Companies should explain how they intend to engage with shareholders when announcing meeting results in cases where a significant number of votes were cast against any resolution.

equiniti EZINE > October 2014

In addition to the 2014 Code, the FRC also published three related documents: ■■ Guidance on Risk Management and Internal Control and Related Financial and Business Reporting ■■ Guidance for Directors of Banks on Solvency and Liquidity Risk Management and the Going Concern Basis of Accounting ■■ Revised Auditing Standards.

The first of these is an amalgamation and update of the 2005 Internal Control: Guidance to Directors (the Turnbull Guidance) and the 2009 Going Concern and Liquidity Risk: Guidance for Directors of UK Companies.

If you would like more information, please contact your relationship manager.

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equiniti EZINE > October 2014

Doug Armour, Technical Director at Equiniti David Venus takes a brief look at the Small Business, Enterprise and Employment Bill 2014

In brief

The Small Business, Enterprise and Employment Bill was published and had its first reading in Parliament on 25 June 2014.

The Bill follows on from the BIS discussion paper on Transparency & Trust published on 15 July 2013 and the consultation issued on 7 October 2013 under the Red Tape Challenge on company filing requirements.

It has now passed to committee stage and written evidence has been requested, which the committee is expected to consider during October. It is anticipated that this will receive Royal Assent prior to the election in May 2015, but is not likely to come into to force until April 2016, so as to allow Companies House and various other bodies enough time to make the necessary procedural changes to their systems.

Among other matters, the Bill proposes changes to both the Companies Act 2006 and the Company Directors Disqualification Act 2006 relating to: ■■ New register of people with significant control ■■ Abolition of bearer shares ■■ Prohibition on appointment of a director that is not a natural person ■■ Replacing the annual return with a confirmation statement

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■■ Extending the statutory duties of directors to include shadow directors ■■ Extending the provisions relating to disqualification of directors to include overseas companies ■■ Amending the format of the statement of capital.

During October our company secretarial business will be issuing its regular update newsletter, which will provide an in depth review of the proposed legislation and its impact on companies.

To receive the update newsletter Please contact your relationship manager. continued on page 7

Client Focus

equiniti EZINE > October 2014

With one of the biggest ever saveshare maturities seen in the UK, BT made a complex issue simple for its employees

BT saveshare maturity gives employees a wealth of choices BT is a global brand with over one million shareholders. A significant proportion of these people work for BT – the company has about 72,000 people in the UK, and 60% of them own shares.

One reason for that is the company’s saveshare plan. BT sees saveshare as a key driver for employee engagement and invests substantial effort in the way that plans are designed, delivered and communicated.

Almost a third of BT’s UK employees took part in the company’s most recent saveshare maturity – a five-year plan worth on maturity a grand total of more than £1.1 billion1.

The average participant paid in £124 pcm over five years, and saw the £7,762 savings turn into an investment worth over £49,000 (a potential gain of almost £42,000)1. More than 7,000 people saved the maximum £225 pcm, and saw the value of their investment rise

Saveshare rewards can be very fruitful

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client focus

equiniti EZINE > October 2014

The Equiniti team was most responsive to my needs. We worked in partnership to build the choices, map each user journey and communicate effectively with the participants.

Francis O’Mahony Head of Employee Share Plans at BT to almost £90,000 (a potential gain of almost £76,000)1.

Those running the plan realised that the potential beneficiaries needed to understand a range of financial issues they might not be familiar with – such as the potential Capital Gains Tax (CGT) implications – there was also the recent change in saveshare savings limits, which BT increased to £300 per month.

To enable a high proportion of potential beneficiaries to absorb the details, a year-long communications strategy was created to ensure people made choices that were well-informed.

Research was carried out to find out when, how and in what form people would most readily absorb the necessary information.

The lessons from this resulted in a monthly series of personalised emails to participants on

key topics with links to further information if desired.

The emails highlighted the potential gains each individual could make and dividend they could receive, which made the subsequent points about financial planning more salient.

People were thus more willing to invest time and effort in understanding matters such as CGT allowances, spouse CGT allowances, ISA allowances, the plan maturity date and the interaction with ex-div/dividend record dates.

The personalised emails were also combined with a whole series of other educational tools including: interactive booklets; Q&A’s; help sheets; online modelling tools; echats; and interactive newsdesk articles. And for the first time ever, the share plans team got the message across by way of broadcasting a live auditorium

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‘Questiontime’ panel session, hosted by BT’s Company Secretary and attended by over 600 employees. BT people attended in person or joined and asked questions online using the company’s intravision.

Personalised emails offered five maturity choices, all accessible and selectable via the Equiniti portal. Choices could be selected individually or in combination as follows:

The Equiniti portal - online maturity options

■■ Keep some or all in CSN (EasyShare) ■■ Sell some/all straight away ■■ Transfer some/all to spouse CSN ■■ Transfer some/all to an Equiniti ISA ■■ Transfer to the BT Retirement Savings

Scheme (SIPP pension).

So what happened?

■■ Over 90% of employees gave instructions before the cut off for the first allotment ■■ Participants exercised options over 269 million shares for the first maturity date ■■ Less than 5% of the shares bought on the first maturity date were sold immediately ■■ 13,000 employees put 127 million shares into CSN ■■ 3,700 employees sold some or all of their shares

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client focus ■■ 8,500 used a multiple choice option with 125 million shares ■■ Over 5,500 Equiniti ISA account transfers took place (and a further 1,500 to non-Equiniti ISAs), as well as around 5,300 spouse transfers ■■ There were 74 SIPP transfers.

Carl Trimmer, Employee Services Delivery Manager at Equiniti, who manages the employee share plans tasks on behalf of BT, commented on the process: “There were no precedents to use when working on BT’s saveshare 10 maturity. Thousands of BT employees were looking forward to realising large profits and some had told us it was potentially more money than they’d ever had before or ever expected to see again.

“As BT’s chosen partner, Equiniti was under massive pressure to turn around roughly 23,000 choices in tight timescales. We offered BT employees five choices and most people opted for more than one. We wanted to give people as much time to make their choices as possible, which added to the strain on our team. I am delighted with the way we were able to deliver to our schedule, service level agreements and customers’ satisfaction,” Carl says.

Francis O’Mahony, Head of Employee Share Plans at BT says: “Around one in three BT

equiniti EZINE > October 2014

people had a saveshare plan mature on 1 August this year. Others in the industry tell me this is one of the biggest and most complex saveshare maturities they have ever seen, with the most flexible online choices ever offered.”

“The Equiniti team was most responsive to our needs. We worked in partnership to build the choices, map each user journey and communicate effectively with the participants.

With £1.1bn worth of shares under option on 1 August, I felt like I was facing the millennium bug all over again – we just didn’t know what was going to happen. The fact everything went so smoothly and that the BT share price remained stable, is testament to terrific team work.”

Based on the BT closing share price on 31 July 2014 of 388.5 pence 1

If you would like more information Please contact your relationship manager.

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10

MINUTE guide

equiniti EZINE > October 2014

What can Enterprise Social Networks – ‘Facebook for the workplace’ – do for your business?

Enterprise Social Networks From humble beginnings as a way for students to keep in touch, social networks have become a crucial business tool bringing rapid communication, breaking down silos and offering new opportunities for collaboration. Today, many businesses are reaping the benefits of internal chat systems modelled on public social media platforms. Here are five ways your business could benefit from Enterprise Social Networks (ESN).

Connectivity

You’ve encountered a problem in the workplace. The person to whom you would usually turn has moved to a different floor, a different building, perhaps even a different continent. With globalisation businesses are becoming both bigger and more widespread, resulting in the need to re-establish efficient connectivity between employees within an organisation, and this is one of the main benefit of ESNs.

Knowledge

Peter Crosby, Head Of Brand Voice for TIBCO Software’s ESN, tibbr, says that a business is only as good as the people who work there, and they’re only as good as the knowledge they have. ESNs can gather the expertise of present and past employees and make it accessible to all, regardless of departmental and geographical separation. They also enable businesses to monitor and manage the relevance of knowledge in order to keep it up-to-date.

Collaboration

Inter-departmental and international collaboration is vital for many businesses in an effort to keep up to speed with innovation.

ESNs are the areas in which employees right across businesses are encouraged to contribute collectively to the development of business innovation. These informal platforms can make for a highly fertile environment where

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an employee feels connected and able to contribute to the wider business beyond their own department.

Talent

Encouraging collaborative contribution to knowledge bases can also release the untapped potential of individual specialist

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10 Minute Guide knowledge, previously only harnessed within departmental silos. Too often employees are pigeonholed according to their job-descriptions, thus preventing the discovery and distribution of fresh talent within businesses, but ESNs provide opportunities to demonstrate their expertise.

Commentary

In his article ‘9 Benefits of an Internal Social Network’, business journalist Russell Working says ESNs provide “reality checks” for corporations. They create hubs in which employees can individually voice thoughts and opinions for their entire business communities to hear. The result can be a facility, which provides accurate, trusted information from the very people who are responsible for keeping the individual business running. It’s also a way of inviting external commentary from business customers.

equiniti EZINE > October 2014

Four to watch ESN can certainly benefit a business keen on keeping up-to-speed with business development in the modern world, but that is not to say the business can simply implement a platform and expect instantaneous results. It takes time for such a new facility to become commonplace in the workplace. Done right and with patience, though, the results will speak for themselves.

Here are four ESN platforms to consider.

1) tibbr – Simplicity, integration and customisation lie at the heart of the first ESN (www.tibbr.com) 2) Yammer – An ESN with a particular commitment to generating success through connectivity and networking (www.yammer.com)

3) Socialcast – Focused on directing and organising conversation within business (www.socialcast.com) 4) Salesforce Chatter – A free ESN, which enables efficient crossorganisational collaboration (www. salesforce.com/chatter/overview)

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equiniti EZINE > October 2014

UPdate

All of the latest industry news from Equiniti

Getting up to date

We look at some of the latest changes to employee share plans

Naturally, we followed the Scottish referendum with interest. A ‘yes’ vote could have impacted employees in Scotland currently participating in employee share plans, especially if the currency changed.

We do still have a number of other changes coming up, which are highlighted below:

Registration, self-certification and online filing of employee share schemes

In the last edition of the Ezine, we provided information about HMRC’s new online share scheme registration and filing, which was also discussed at Equiniti’s Employee Services Forum. We have received confirmation from a few companies that they have been through the process and completed their registration.

However, there are still many others that haven’t yet completed this. Although the

deadline is July 2015, we are keen that registration is completed well before then, before April 2015 ideally, when filing of next year’s tax returns will commence. The key message is that if existing schemes are not registered in time they will no longer be tax advantaged.

From 2015, annual return filing will be carried out online and paper forms will no longer be accepted. The new online templates are on the HMRC website and show that the questions have changed in some areas, which means there is now more information required.

HMRC will be issuing further guidance about this, at which point we will be able to assess the impact of the changes.

FATCA

UK tax advantaged SAYE plans (as well as other share plans) are exempt from Foreign

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Account Tax Compliance Act (FATCA) reporting.

However, at maturity, if a trust is used to provide shares for employees exercising their option, the release of shares may require FATCA reporting. The use of trusts for employee benefit purposes and the release of shares to employees has been covered in the updated August 2014 UK FATCA Guidance

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equiniti EZINE > October 2014

Notes. The section on ‘Employee Equity Incentives’ includes the following: In cases such as Employee Benefit Trusts, or other similar structures which do NOT maintain financial accounts, when shares are allocated and the trustee is directed as soon as reasonably possible to transfer the assets (to the beneficiary, broker, custodian etc), the Trust will not be treated as maintaining a Financial Account for the duration of time it takes to complete the transfer.

If this wording is also used in offshore FATCA Guidance Notes, it is likely that FATCA reporting will not be required from discretionary Employee Benefit Trusts used for share plans.

T+2

With standard settlement periods for share dealing moving from three to two days this month, we have reviewed our various employee share plan dealing services. T+2 settlement will be used for both SAYE and SIP dealing. Other employee share plan dealing services will continue with their existing settlement terms, varying between T+0 and T+10 depending on how quickly funds and shares can be delivered.

If you would like more information Please contact your relationship manager.

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Update

equiniti EZINE > October 2014

Equiniti ICS scoops prestigious Microsoft partnership award

An exceptional partnership Equiniti ICS recently won Microsoft Hosting Partner of the Year at the 2014 Microsoft Worldwide Partner Conference in Washington DC. The annual awards acknowledge exceptional achievements of Microsoft’s partners and the exemplary use of its technologies. Equiniti ICS won the award as a result of its dedicated programme of engagement, investing heavily in the partner relationship, employee training and cloud related technologies.

“Receiving this award is fantastic news for the business and receiving it at Microsoft’s biggest partner event, the World Partner Conference, was a real highlight,” says Nigel Farr, Director, Equiniti ICS. “Our customers benefit significantly from our cloud-based services and this award recognises the strong relationship we have built with Microsoft over the years and our commitment to Microsoft technologies to deliver bespoke solutions to complex requirements.”

Cathriona Hallahan, Managing Director - Microsoft Ireland and Paul Lemon, Business Development Manager at Equiniti

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