Marks & Spencer (MKS) made no bones about it. “Sharesave is a risk-free savings plan,” it told its employees in 2020. “You will always get back the money you have saved.” And it rightly added that if the M&S share price goes up, you could get back much more. But it also said: “Remember shares can go down in value as well as up.”
That’s the problem with compliance. It can put people off. M&S managers evidently think they have to carry this warning to cover themselves, but they’re missing the point. Nobody participating in Sharesave risks losing if the share price goes down. Sharesave is entirely voluntary, and the opportunity only comes around once a year. It’s inclusive, and designed to encourage saving, with a share option tacked on that comes for free – at the end of three years, the amount saved can be used to buy M&S shares at a preferential rate. The decision is simple: if the share price is below the option price, take the cash; if the share price is higher, convert the cash into shares. Those risk-averse can sell immediately. (Nominal) downside risk zero; upside risk no limits. You could think of Sharesave as a one-way bet.
The price of the option was set at 20 per cent below the price at which the shares traded in the market during three days in November 2020. At this time, retailers were suffering due to the impact of lockdowns and the cost of the pandemic: the M&S share price had fallen almost to 100p, and the Sharesave option price was set at 82p. Participants had to decide how much to save – anything from £5 to £500 a month. The three-year saving period ran from January 2021 to December 2023. Participants now have six months (from February 2024) to decide whether or not to use these savings to buy M&S shares.