Case study: How BAE Systems implemented its international share plan
BAE Systems has launched its first-ever employee share plan for non-UK taxpayers. Kristian Brunt-Seymour explains the details.
- InSIP is open to 5,500 employees in Saudi Arabia
- It mirrors the organisation's UK SIP and intends to promote movement of people between the two locations
BAE has launched its first employee share purchase plan available for non-UK taxpayers.
The aerospace and defence company made the international share incentive plan (SIP) available to around 5,500 employees (300 of which are expatriates) spread across seven locations in Saudi Arabia.
InSIP mirrors BAE's UK SIP in terms of structure, minimum and maximum savings limits and maximum value of matching shares available.
It was launched in July and has recorded a 6% employee take-up in the first few months.
Employees can buy partnership shares with a monthly contribution of up to £150 per month which must be held in the scheme for three years.
The current minimum amount is 60 riyals or £10 with the maximum amount being 900 riyals or £150.
Savings are converted from Saudi riyals into pounds sterling to buy the shares and then converted back if the shares are sold.
International consistency
To keep the UK and Saudi Arabian SIPs identical the company is making monthly and annual comparisons between the two schemes.
A series of workshops were held with HR and payroll teams to help communicate its introduction.
The organisation has 83,000 employees worldwide and said one of the key reasons for opening the international SIP was to promote movement within the global territories.
Speaking at the IFS ProShare conference, BAE Systems Saudi Arabia head of HR Maria Catterall said: "One of the reasons we wanted to introduce the InSIP was to encourage the transfer of employees between entities so that they could retain this benefit when they moved companies, and what we want to see is whether this is acting as a lever to encourage the transfer of people.
"Certainly from early employee engagement on the reason for their transfer, employees were citing their benefits and in particular a share incentive plan was one of the main reasons why they wish to transfer."
"Encouragingly, 58% of those participating are Saudi nationals with 42% expatriates. We've also seen that 83% of participants are choosing to participate with the online portal which is in English only. We plan to take this portal to Arabic as well, but this participation online is very encouraging."
Local authorisation
The plan needed to be approved by Saudi Arabia's capital markets authority (CMA) which was arranged through an authorised individual based in the kingdom.
As well as the currency, company representatives also had to comply with Saudi Arabia's Islamic legal system when implementing the scheme, including employment propositions and communications.
With 60% of BAE's workforce in the country being Saudi nationals and working in a wide range of locations across the kingdom without access to company email accounts, communications had to be in hardcopy in both Arabic and English.
BAE HR champions helped employees in several ways: through workshops to inform company staff about the plan, introducing them to the online portal and explaining how to complete share plan application forms.
A series of frequently asked questions were also distributed to HR Champions in hardcopy.
BAE plans to engage more with its Saudi national colleagues through Arabic-only speaking workshops which will inform them about the share plan, sharia law and how they work together in the scheme.
Trade body IFS Proshare warmly welcomed the move. Head of employee share ownership Gabbi Stopp said: "Launching an international plan is no mean feat and we applaud BAE Systems for adapting their SIP to meet the needs of a significant employee population. BAE's InSIP makes good on this commitment and we are delighted that its Saudi-based employees will be able to share in the success of the company."
Employees buy partnership shares with a monthly contribution of up to 900 Saudi Arabian riyals (equivalent to £150) per month. These must be held for at least three years.
Employees receive matching shares at a 1:1 matching ratio up to the value of £75 per month. They are forfeitable in the first three years. There is a holding period of five years.
Dividend shares can also be earned by employees. These dividends are reinvested and there is a three year holding period.
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