A common hurdle facing companies looking to introduce an equity compensation plan is how to ensure employees based in different locations are receiving consistent and clear information – with many of their employees working at sea this was of particular concern for ferry company DFDS.
But connecting people and businesses has been at the heart of DFDS’ mission since its foundation in 1866, with the publicly traded entity (listed on the Nasdaq in Copenhagen) now operating two commercial divisions – the Ferry Division (moving freight and passengers on ferry routes) and the Logistics Division (providing transport and logistics solutions for a wide range of businesses).
The possibilities around embracing broad-based equity compensation came about while DFDS was exploring and developing its overall, company-wide strategy document in 2020. What emerged was a one-off, three-year plan, Special Rewards Programme, designed to reward non-executive employees.
DFDS sought to introduce their Special Rewards Programme as a way to show appreciation to its people for their contribution to the company’s strong performance and also to strengthen the bond between management, the board of directors and employees.
Introducing such a plan wasn’t without its complications however.
The challenge
A key issue identified at the outset was that many eligible employees possessed limited IT literacy and financial knowledge, with the idea of an employee share plan being a foreign concept for some.
To further compound this a significant percentage of eligible employees were non-office personnel and based mainly on vessels. These seafarers did not have guaranteed daily access to a computer, while many relied on personal email addresses rather than company accounts.
These were issues which needed to be tackled at various points in the life cycle of the Special Rewards Programme, most notably in early 2023 when DFDS company partnered with J.P. Morgan Workplace Solutions to facilitate the delivery of shares to participants through our stock plan administration platform and then again in late 2023 and into 2024 towards the end of the plan’s life when individual participants were required to make formal decisions around whether to keep or sell their shares.
That this set of circumstances presented DFDS with a communications and education challenge from day one was something they sought to address and overcome when it came time to vest and participants were required to engage with the Workplace Solutions platform.
The solution
When the plan was originally launched and employees signed up DFDS had expected that they would be able to transfer shares directly to the private accounts of individuals; however, when they realized this would not be possible the need to partner with an equity compensation provider became clear.
One of the first steps that DFDS and Workplace Solutions identified was that participants would not only need refreshers on the key elements of the plan but would also need to be educated on the role of Workplace Solutions. Further to this those participants would also require training in the use of the platform.
DFDS and Workplace Solutions both rose to the challenge and a mix of different communications channels were utilized, including print, in-person and online elements, and included sending individual letters and emails. Colleagues contacted offshore crews, follow-up calls were made and live webinars presented to both land- and ship-based personnel, with on-demand versions made available afterwards to those unable to attend initially. It was important for DFDS that they reach out from as many angles as possible to reach their employees.
A company spokesperson explained that the need to get all participants registered on the Workplace Solutions online platform helped to focus everyone involved. “The way the platform is set up proved to be an advantage. The initial step required all participants to register on the system and that forced our hand to get everyone set-up as quickly as we practically could,” they said.
Workplace Solutions contributed to this education drive by presenting live demos showing how to sign-up for and use the platform, with these presentations also made available for on-demand viewing.
Then, in early 2024 as the plan neared the end of its term, participants were informed of the need to decide whether to sell their shares or transfer them to a private account. Once again, a conscious education and communication drive was required, with Workplace Solutions providing support to participants as they made and sought to implement their decisions.
From the point that DFDS partnered with Workplace Solutions, participants needed to complete the account opening, become familiar with relevant terms and conditions and come to understand the process of selling and transferring shares on the platform. All of this was done in line with very tight deadlines.
What about the plan?
The three-year Special Rewards Programme targeted all non-executive employees. Under its terms, plan participants were granted free shares, with the number linked to weekly hours worked, up to a maximum of 50 shares for those working more than 24 hours per week. These shares vested over the term of the plan and ultimately had to be either sold or transferred to individuals’ private accounts.
What did success look like?
One of the most obvious metrics when looking to assess the success of an employee equity compensation plan is participation. On this measure, DFDS is rightfully delighted with how their people responded to the Special Rewards Programme.
Initially, in 2020, more than 1,550 employees were eligible to join the plan, approximately 18% of the total workforce at the time. In 2023, 758 individuals had their records added to the Workplace Solutions online platform – representing the employees still being with DFDS (following the COVID pandemic, ‘the great resignation’ and normal churn), with 702 employees going on to receive shares.
The plan also proved to be a success in terms of raising awareness around and encouraging employee share ownership. This point is underscored by the fact that at the close of the plan approximately two-thirds of participants chose to retain their shares, as opposed to selling them at the first opportunity.
What next?
While this plan has now come to an end, DFDS and Workplace Solutions continue to work together, with our platform now hosting data for the company’s LTIP targeted at executives and directors.
Reflecting upon the experience of running the Special Rewards Programme and partnering with Workplace Solutions, a company spokesperson concluded by stating, “If we were to launch a new all- employee share programme, we’re now much better equipped to handle it.”
Learn more about how we can support you and your compensation strategy.
All case studies are shown for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation. They are based on current market conditions that constitute our judgment and are subject to change. Results shown are not meant to be representative of actual results or experience of other individuals. Information is not a guarantee of future results.
All companies referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by J.P. Morgan in this context.
Logos are trademarks of their respective owners and are used for illustrative purposes and should not be construed as an endorsement or sponsorship of J.P. Morgan Securities LLC.
This publication contains general information only and J.P. Morgan Workplace Solutions is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. J.P. Morgan Workplace Solutions’ Insights is not a substitute for professional advice and should not be used as such. J.P. Morgan Workplace Solutions does not assume any liability for reliance on the information provided herein.
