What Is an Employee Share Scheme?
An employee share scheme is one of the most powerful tools a Nigerian listed company can offer its workforce. Rather than paying a cash bonus that is spent and forgotten, a share scheme gives employees a genuine ownership stake in the business they help to build. When the company performs well, employees benefit directly — through share price appreciation and dividend income.
Employee Share Scheme. An employee share scheme is a formal arrangement by which a company allocates shares — or rights to acquire shares — to some or all of its employees, typically as a form of compensation, long-term incentive, or ownership benefit.
Why companies create employee share schemes
Listed Nigerian companies create employee share schemes for three core reasons: retention, alignment, and reward. A share scheme creates a long-term incentive for employees to stay with the company and contribute to its growth — because their own financial outcome is tied to the company's performance. For companies listed on the Nigerian Exchange (NGX), a share scheme also signals to the market that the company invests in its people.
Types of employee share scheme in Nigeria
The most common types are: (1) Share Allotment Schemes — where the company grants shares outright to eligible employees, typically subject to a holding period. (2) Employee Stock Option Plans (ESOPs) — where employees receive the right to purchase shares at a fixed price, exercisable after a vesting period. (3) Share Incentive Plans (SIPs) — where the company matches or grants shares based on performance targets. Each type has different regulatory, tax, and administrative implications.
How employee share schemes are regulated in Nigeria
Employee share schemes for listed companies in Nigeria are governed by the Companies and Allied Matters Act (CAMA) 2020, which provides the legal authority for a company to issue shares to employees. The Securities and Exchange Commission (SEC) Nigeria has rules covering employee share schemes for listed companies, including notification requirements. The Nigerian Exchange (NGX) listing rules also impose obligations on companies that issue shares to employees.
Direct ownership vs pooled schemes
A key distinction in how employee share schemes are administered is whether each employee's shares are registered directly in their own name — or held collectively in a pooled or nominee account. With direct registration through CSCS, each employee is a named shareholder with full rights: dividends, voting at AGMs, and a clear ownership record. With a pooled scheme, employees have a beneficial interest but are not the named shareholder. Shares Saver administers schemes using direct registration.
How employees benefit from a share scheme
Employees who participate in a direct-ownership scheme benefit in several ways: they receive any dividends declared by the company as a named shareholder; they benefit from capital appreciation if the company's share price rises; they have voting rights at Annual General Meetings; and they have tangible, documented proof of their shareholding. These are real ownership rights — not just an app balance.
Questions
About employee share scheme
This article is for general information and educational purposes only. It does not constitute financial advice, investment advice, legal advice, or tax advice. The value of investments can fall as well as rise. Seek independent regulated financial advice before making any investment decision. Shares Saver does not provide financial advice.
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