Eversheds hands voting rights to fixed-share partners
Senior salaried partners can now spend up to 20% of their remuneration on profit points and vote in firm elections
May 04, 2015 at 07:04 PM
3 minute read
Eversheds will allow fixed-share partners (FSPs) to vote in its elections and take home a profit share after unanimously voting to shake up its remuneration system for salaried partners.
The new scheme will see the creation of a band of senior FSPs who will be eligible to vote in the election of the firm's chairman, chief executive and board and buy into a profit pool worth up to 20% of their remuneration. Their votes will carry exactly the same weight as equity partners.
The senior tier will be open to all FSPs who have held the role for seven years or more, as well as those that meet certain performance criteria. Currently 144 of the firm's 211 FSPs have been in the role for the required amount of time to be qualify.
In addition the firm is introducing a bonus package tied to firmwide performance for FSPs not in this top bracket and giving all FSPs the right to vote in board elections.
All Eversheds FSPs can already receive up to additional 25% on top of their base remuneration each year based on their individual performance and this will continue alongside the other schemes.
Eversheds managing partner Lee Ranson (pictured) said: "It is an important step in developing an even more transparent approach to remuneration and one that more clearly links performance to reward and enhances partner engagement."
The reforms took effect from 1 May following a wide-ranging consultation with the partnership over a 12-month period, culminating in a "unanimous" vote for the changes in February.
Ranson said that although tax changes made by HMRC last year, which forced non-equity partners to contribute a minimum of 25% of their fixed-share salary in capital to be classed as partners rather than staff, did have an impact, the overriding reason for the policy shift was "cultural".
Last year the 164 FSPs at the firm were asked to contribute 25% of their annual earnings in light of the HMRC change – though this did not entitle them to a share of the firm's profit.
Eversheds' move follows similar moves by rival firms prompted by the tax rule changes.
In May last year Watson Farley announced that just over 20% of the earnings of the firm's 20 fixed-share partners in London would be directly tied to the firm's financial performance.
Meanwhile Withers and Ashurst have increased the variable element of junior partners' – who are often FSPs – pay that is linked with the firms' performance without requesting additional capital, with the former adjusting arrangements for 25 junior partners.
As Legal Week reported in March Taylor Wessing has brought all of its partners into the equity structure, in part in response to the tax changes.
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