When Barclays awarded £500 in shares to 90,000 employees this year, its chief executive, CS Venkatakrishnan, said it was about “engendering a form of loyalty and identification with the company”. Midway through a restructuring, he wanted the workforce “invested in the results”.
The bank, along with Rolls-Royce, Babcock and Aviva, are among the large UK companies that have handed out free shares to staff in the past year. Many have billed the move as part of a broader shift in employee incentives that aims to change how regular workers are aligned with their employer’s success.
Barclays’ £50mn push, Venkatakrishnan argued, was as much about morale as money. “Pride comes from many things,” he said — from treatment of staff to what products and services a company offers, but also “financial success”.
There was a sharp increase in the number of free shares granted to employees during the pandemic, as companies sought ways beyond cash to show their appreciation. In the post-Covid scramble to hire, when wage inflation and job-switching peaked, employers leaned on equity awards to retain and motivate staff, along with other benefits including flexible working and wellbeing perks. The level of equity handouts has fallen but is still elevated compared with before Covid, according to Equiniti, which tracks shareholder data.
Workplace experts have said the shift reflects a recognition that rewarding staff is no longer just about pay. Companies are aware workers want to feel part of something bigger — particularly in sectors where morale has frayed. These schemes dovetail with rising expectations around social responsibility and corporate governance, signalling visible commitments to shared prosperity.
Employee share schemes are used by companies to award shares directly to workers or grant options to buy them. The UK government offers several schemes that have tax advantages for employers and their staff. Save As You Earn and free shares through share incentive plans are specifically designed for all employees.
Until recently, supermarket chains and employers of low-wage workers led the charge on staff equity in the UK. Mitie, the British facilities group, whose name is an acronym for “management incentive through investment equity”, has been among the most enthusiastic adopters. Today, the company’s some-70,000 employees are granted shares as part of their pay.
“What will be interesting to see is how [equity giving] evolves over time,” said Iain Clacher, professor of pensions and finance at Leeds University Business School. The hope is that a tangible stake in a company shifts how employees engage with their work — and their managers. Post-financial crisis, he added, many professionals have developed a “more nuanced view about their purpose”.
The Social Market Foundation, a cross-party think-tank, has argued that employee ownership boosts long-term productivity, deepens engagement and improves financial resilience. In a recent survey of employees at listed companies, 60 per cent said share awards would encourage them to stay longer in their roles, while 58 per cent felt more motivated at work because of them. Nearly half said they expected their shares to increase in value — an implicit vote of confidence in their employer’s prospects.
Keely Lead at the Employee Ownership Association said free share awards were a great way to “share reward and engage employees as they will want their stock to . . . increase in value”.
For younger workers who are often locked out of milestones such as home ownership, immediate, tangible stakes in their company’s future can carry weight.
Another development has been the rise of employee ownership trusts, where business owners hand over control to a trust for the benefit of employees. The Entertainer, the UK’s largest toy store, last month announced plans to hand over ownership to its 1,900 staff. There are now nearly 2,500 employee-owned businesses in the UK, with 560 new transitions in 2024, according to the EOA.
Still, sceptics question whether share awards are a tool for empowerment or simply a tactical response to turbulence. “Often these awards are designed to offset bad news or something challenging,” said Nita Clarke, director of the Involvement and Participation Association. “How it lands will depend on the circumstances.”
At Rolls-Royce, share awards worth about £700 for each employee followed a successful corporate turnaround. But at Aviva, £500 of free shares to 32,000 staff was linked to the completion of the insurance company’s £3.7bn acquisition of Direct Line, which will require more from workers.
Clarke concedes that if done well, equity incentives “could make a difference”. Unlike bonuses or performance-related pay, which she calls “incredibly divisive”, shares given universally carry a different emphasis.
Venkatakrishnan, whose total remuneration has more than doubled to £10.6mn since 2023, says awarding equity is also about reviving “a culture of share ownership in the UK”.
Clacher, the business school professor, said for many leaders of UK companies, there is a perception that “the culture of investing hasn’t been right.” Home ownership is often seen as the route to wealth creation and financial stability, while those with savings would prefer to hold it in cash rather than invest it.
He cautioned, however, that share awards were “not a substitute for wage increases”.
But Sonia Gilbert, a partner at Clifford Chance advising on pay and share plans, said the approach has traction. “It helps make things more sticky,” she said. “It’s an opportunity for wealth creation, even at a fairly modest level.” Many companies already have Save As You Earn schemes, she added; the latest wave of free share plans could be a “springboard to further share ownership”.
