COMPANIES SUPPORT DEMANDS FOR INTERNATIONAL ACCOUNTING STANDARD ON SHARES TO EXCLUDE ALL-EMPLOYEE PLANS

Representatives from many leading UK businesses met with international standard setters in London today to press home a call for the International Accounting Standards Board (IASB) to exempt all-employee share plans from their new accounting rules. The forum, organised by ProShare and attended by 250 delegates, was told by ProShare Chief Executive, Diane Hay, that if implemented, the current proposals would result in companies stopping or scaling back their all-employee plans.

Delegates heard that the new rules will apply to all UK companies except the very smallest and to any company listed on a regulated market in the EU. Bob Garnett, a Board member of the IASB together with Kimberley Crook, the IASB Project Manager, set out the background to the IASB’s proposals and the need to provide users of accounts with better quality information and to provide a worldwide solution to an urgent accounting problem. Mary Keegan, Chairman of the UK’s Accounting Standards Board, strongly supported the need for international consensus. A key step will be whether the European Commission will adopt the new rules and delegates heard the initial views of Paul Rutterman, the Secretary General of EFRAG, a private-sector body that will advise the European Commission on this issue.


ProShare believes that the main casualty will be employees who benefit from the highly successful SAYE (or Sharesave) share option plan that has been used for over 20 years. This is the most popular share plan in the UK and there are currently 1,200 SAYE plans with a million participating employees. Generous payouts in shares and cash under SAYE plans have provided a valuable top-up to retirement pensions and savings as well helping people to meet everyday expenses and repay their debts.

Mary Keegan, Chairman of the UK’s Accounting Standards Board, commented, "I personally find it difficult to see that the benefits of all-employee schemes are not part and parcel of the remuneration package. However, if there is a clear and compelling argument why this is not the case, then the standard-setters should be willing to listen."

Meanwhile, ProShare Chief Executive Diane Hay said, "I’m encouraged that the IASB has openly recognised the concerns that many companies and the TUC have expressed on the damage these proposals could do to all-employee plans. We think that the case to exempt these plans is compelling and we will continue to campaign heavily for this."

Press Release Contact:

Claire Davidson or Andrew Smithith
020 7976 5555/07767 351433.

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