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LEO Pharma Case Study

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LEO Pharma’s commitment to improving people’s lives goes beyond their customers, and the introduction of their award-winning ESPP proves just that, with inclusivity at the forefront of every decision.

When August Kongsted and Anton Petersen bought the LEO pharmacy in Copenhagen in 1908, they immediately set about supplying standardised medication to the market, using the latest advances in industrial processes. Since their establishment, LEO Pharma have had many accomplishments including funding ground-breaking research to produce the first batches of insulin in Denmark. Fast-forward 115 years and the company continues to make strides in its product development, with a clear vision focused on being the preferred medical dermatology partner to improve people’s lives.

This striving for excellence has cultivated an internal working culture that nurtures personal development and inclusivity, and so it was a natural progression for LEO Pharma to set about creating a share plan to give their employees, current and prospective, a tangible stake in the future success of the business. And so, their company-wide Employee Share Purchase Plan (ESPP) went live in December 2021.

When LEO Pharma’s board set about introducing a share plan for its employees, they had quite the task on their hands. With 88% of their total workforce eligible to participate and operations globally, it was imperative that the company’s ESPP got it right from the start.

“We were eager to reward employees for their contribution to our success as a business and we were determined to reach all employees with our share plan through a thorough information effort,” says Wandunia Pontoppidan, Senior Director, Global Performance & Rewards, LEO Pharma.

A Plan for All

With offices spanning far and wide around the world, LEO Pharma immediately faced jurisdictional issues. Not all countries in which the company operated allowed equity-based incentives, so they had to get creative, with the help of their equity compensation management partner, Global Shares, a J.P. Morgan company.

It was decided that in countries with few employees, and where equity incentives couldn’t be offered due to regulatory issues, a Phantom Plan would be introduced, an alternative to the ESPP mirroring its features in all respects, save for the fact it was instead a cash-based award. Echoing LEO Pharma’s drive for inclusivity, this development helped ensure that all eligible participants, regardless of location, had the same opportunity for employee ownership.

Engaging Employees Through Communication and Collaboration

Once the issue of plan adaptability was resolved, LEO Pharma faced its next hurdle; ensuring that all employees, no matter where they were based, would have the resources necessary to fully understand the complexities of what an ESPP was, and more importantly, why they should participate.

Again, the focus on inclusivity was paramount when creating LEO Pharma’s comprehensive engagement strategy, to ensure a clear line of communication. This included:

  • All ESPP-related documentation were translated into the native language of the countries where LEO Pharma offices were based
  • Local regional focal points were appointed to explain the ESPP and were a resource for employees to get their questions answered
  • A robust communication plan was put in place with a clear timeline to share information in the lead up to and overlapping with the enrollment period in December 2021
  • Online manager briefings, focal point information sessions, Q&A sessions, and all-employee information sessions were hosted in-office and online
  • Information posters and marketing materials were produced in local languages

This communication plan was not a one-way street, however; LEO Pharma consulted with employees to understand what they wanted from their ESPP. Taking these different viewpoints into consideration was critical to its design, ensuring the share plan was participant-aligned before final decisions were made.

Simplifying the Enrollment Process

Finally, it was time for potential participants to move into the enrolment stage. It was key that the process of signing up for the share plan was accessible for all, simple to understand and as straightforward to complete as possible.

As LEO Pharma’s provider, the Global Shares team worked to ensure the enrolment process was as seamless as possible by implementing:

  • An easy-to-use sign-up process for participants to register, with all eligible employees receiving a preliminary email to activate their account online
  • An easy-to-follow enrolment task for participants

And internally in LEO Pharma payroll deductions and admin tasks were set-up on participants behalf.

The Finer Details

LEO Pharma’s ESPP was uniform in its design; all participants would invest 3% of their annual salary, capped at €8,000, from December 2021 through monthly deductions, with the accumulated funds converted into shares at the end of each quarter. To further encourage participation, LEO Pharma would award free shares to participants in two rounds through 50% top-ups, the first taking place in January 2025, the second due to coincide with an IPO in the coming years, subject to a performance threshold. The goal was to motivate employees to become long-term shareholders in the company, and so it required participants to retain some of their shares post-IPO to achieve this.

Award-winning Success

A key metric on the effectiveness of LEO Pharma’s efforts, as with any share plan, was the final participation rate. By the end of December 2021, more than 43% of eligible employees registered for either the ESPP or Phantom Plan via Global Shares’ online platform; 2,322 had bought into LEO Pharma’s vision of employee ownership.

Success is not just measured in numbers though; anecdotally, there has been increased interest amongst employees in the performance of the business, and the ESPP has played a role in LEO Pharma’s value proposition, with employees wanting a better understanding of the company’s long-term strategy. This was something that was recognized when Leo Pharma were a joint winner in the Best Plan Effectiveness (under 10,000 employees) category at the 2023 GEO Awards.

What’s Next for LEO Pharma?

LEO Pharma’s company-wide ESPP is the first step in their journey towards IPO. With a resoundingly successful implementation, LEO Pharma has been able to align their goals across the company, with each individual participant having a more profound stake in working collectively to achieve its objective of going public.

Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.

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