Andy Davis has been named Personal Financial Journalist of the Year 2011 for his work in Prospect.by Andy Davis / May 24, 2012 / Leave a comment
Andy Davis has been named Personal Financial Journalist of the Year 2011 for his work in Prospect. Judges of the Harold Wincott Awards for financial journalism and broadcasting commended his authenticity in discussing his management of his and his family’s finances. They also complimented Prospect on its personal finance coverage “which included the unlikely sight of John Kay acting as Max Hastings’ personal finance advisor.” Davis shares the award with Jessica Gorst-Williams of the Telegraph.
For a large group of private investors in Britain, the 2012-13 tax year will involve some delicate decision-making: are they confident enough in their own employer to invest in its shares? Or is it time to sell?
In 2009-10, 760,000 people in Britain were awarded options to buy shares in the company they work for under Save As You Earn (SAYE) share schemes. These allow companies to offer their workers options over a fixed number of shares at up to 20 per cent below the market price on a set date. Staff then put aside a monthly amount from their salary and at the end of the term (either three years or five) they can use the money to buy shares at the option price. Ideally the share price will have gone up, making the discounted option more attractive. But this didn’t happen in the years following the dotcom bust. As share prices have struggled, growing numbers of employees have taken back the cash they have saved at the end of the term and let their options expire.
That’s why this year is so interesting. In April 2009, equity markets were at dire lows and the first round of quantitative easing was beginning, in which the Bank of England injected new money into the economy. Despite the crisis, a lot of people decided to take part in SAYE option schemes. The 760,000 who signed up represented a jump of 19 per cent over 2008-09, when markets were still falling heavily. The 2009-10 cohort were awarded options worth £3bn.
Most participants save for three years rather than five, so this year many of those 760,000 employees are likely to exercise their options. If their option price was set towards the beginning of 2009-10, its value is likely to have increased. The question is whether to hold the shares they are entitled to buy, or sell now and take the profit?
SAYE schemes are…