Almost half of employee share schemes are "under water" following sharp stock market falls during the past three years.
About 45 per cent of employees saving through Save As You Earn schemes are now paying more to buy shares in their firm than the shares are actually worth, according to ProShare, which promotes the ownership of shares.
Under the schemes, employees are given the option of buying shares in their company in three or five years' time at a set price with money they pay into the scheme on a monthly basis.
The idea is that by the time staff are able to exercise their options the price of the shares will have risen, meaning they buy them at a bargain price.
But ProShare said falls in share prices meant employees were now buying the shares at a loss, causing them to abandon their existing schemes and start paying into new ones at a much lower option price.
Thursday June 19, 2003
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