Rethinking share plan design: agency in the age of AI

Every wave of technology reshapes the balance between capital and labour. The industrial revolution mechanised muscle. The digital age rewarded coding skills. Now, AI is automating large parts of knowledge work, and not just routine tasks, but increasingly complex decisions.

The question for companies is surely no longer just which roles will remain but how much agency employees should retain. As machines take over the measurable, human value lies in what resists automation. That makes agency not just a philosophical concern but a strategic imperative.

Why agency matters

Agency is the sense of influence: over decisions, over value, over rewards. Strip it away and loyalty evaporates; preserve it and you increase your chances of unlocking engagement, innovation and resilience.

Equity incentives were meant to provide this. Agency theory taught us that if managers had a direct stake in shareholder returns, their interests would be aligned with owners. But agency theory rests on certain assumptions: that managers are risk-averse, that information is asymmetric, and, most importantly, that performance can be boiled down to measurable metrics.

That sits awkwardly in today’s context. In a world where AI models already optimise what can be measured, the human contribution increasingly lies in what cannot: judgement, ethics and influence. Business judgment now means deciding when to launch a product that carries reputational risk, how to handle bias in training data or whether to prioritise customer trust over speed to market. Try writing that into a performance condition!

Too often, incentive plans ignore this. They collapse into what the economist John Kay called “managing to the metric”: EPS hurdles, IRR formulas, TSR rankings - all designed to quantify motivation. Yet, as Kay argued in Obliquity, the direct pursuit of financial results often undermines the very outcomes it seeks.

If we want to unlock the full potential of human agency, we may need to move beyond metrics and embrace the complexity of real-world decision-making. In today’s organisations, agency isn’t just about alignment - it’s about autonomy, trust and purpose.

AI and the new challenge

The risk is obvious. If pay structures double down on narrow outputs, they hollow out precisely the qualities that make people valuable.

Kay’s 2012 review of UK equity markets (you can tell I'm a fan of his) stressed that sustainable value rests on stewardship, not speculation. More broadly, his writing reminds us that capitalism only works when built on trust and mutual dependence, not when reduced to contractual box-ticking. Or as he once put it: the things that matter most are those least susceptible to measurement. Incentive design in the AI era must surely reflect the same logic.

Signs of change

I'd be surprised if the market stood still. And if you look hard enough, you can see signals of a shift - structural, contractual and cultural:

• Option pools in tech: UK start-ups routinely reserve 10-15% of equity for employees, embedding ownership culture early.
• Co-investment schemes: In private equity, sponsors increasingly allow broader groups to invest alongside management. That deepens both risk and agency.
• Employee ownership models: EOTs and co-ops demonstrate that dispersing ownership strengthens engagement and stewardship. Different structure, same principle.
• Rising participation: Carta data shows the number of employee stakeholders in PE-backed companies has increased by ~172% since 2019. While this counts participants rather than ownership depth, it signals that equity participation is broadening beyond management and becoming a more common feature of PE-backed firms.
• Universal share awards: Large UK employers are also turning to all-employee share grants as a way of reinforcing identification with the business. Barclays recently granted £500 in shares to 90,000 staff, with its CEO emphasising “loyalty and identification with the company” at a moment of corporate restructuring. NatWest, Rolls-Royce, Aviva and Babcock have taken similar steps. Framed as morale-building as much as financial reward, these awards demonstrate how equity can operate as cultural infrastructure. 

What rethinking looks like

If we take these signals seriously, share plan design should evolve:

• Broader triggers: Vesting tied to milestones that demand judgment - partnerships, regulatory wins, cultural resilience.
• Layered agency: Use simple, broad-based options for alignment and reserve more tailored instruments - growth shares, synthetics, co-investment - to reward higher-order judgment and strategic calls. Different forms of agency deserve different forms of recognition.
• Participant voice: Build mechanisms for employees to see and influence how plans operate (and I have previously written about better engagement through employee counsels). Kay was right: trust is the hidden capital of markets.
• Staged liquidity: Create routes for employees to realise value before an exit - partial buy-backs, internal markets, secondaries, continuation funds. Long horizons need interim recognition.
• Measuring what matters: Resist the temptation to reduce incentives to the most visible metrics. Link part of the rewards to the drivers of resilience - customer trust, innovation quality, retention of key talent. Long-term value emerges indirectly from getting these foundations right.

The forward view

Metrics are useful proxies. But are they enough? Sustainable businesses are built on trust and judgment, achieved indirectly through stewardship rather than slavish pursuit of targets.

In the age of AI, that lesson becomes more urgent. Algorithms will always reward what is easy to count. If boards follow suit, they risk hollowing out the very qualities that humans bring uniquely to the table.

Equity plans are one of the few tools companies have to counterbalance that drift. Used well, they are not just prizes for output but instruments of agency: reinforcing that people’s decisions, values and discretion still shape long-term outcomes.

The risk, I would posit, is that incentives designed only for efficiency will leave workforces disengaged. The opportunity is that incentives redesigned for agency can preserve what machines cannot replicate and, in doing so, safeguard the value that endures.

At Burges Salmon, we help businesses design equity plans that help foster agency, not just tax efficiency. From broad-based share plans to bespoke co-investment models, we ensure incentives support what truly drives sustainable value.