Many of those with share payouts have been saving modest amounts. Penny Llewellyn, 44, is a personnel clerk at Asda's Killingbeck store in Leeds. She put pounds 20 a month into the scheme for five years and now has almost 3,000 shares, worth about pounds 5,500. "A lot of people have benefited this time - there are a lot of us rubbing our hands together," she says. She plans to save some of the shares in an individual savings account (ISA) and sell the rest to pay for a cruise to celebrate her silver wedding this summer.
With the stock market booming, staff at many other public companies are enjoying similar returns. The schemes ask you to save between pounds 5 and pounds 250 a month over three, five or seven years in a tax-free building or bank society account.
Joining up gives you the right to buy shares several years down the line at a price fixed in advance. The Asda scheme granted share options in 1994 at 47p. (The price you are quoted as a scheme member is generally 20 per cent below the share price at the start of the scheme.) Assuming the company does well in the long term, you cannot lose. Asda's trading price last week was 188p, a 300 per cent increase.
To get a payout you have to save for the full term of the contract and be an employee of the company at the end of the savings period. You don't have to use the money to buy shares - if the shares are trading below the offer price you can have your money back.
Someone entering a share option three-year contract today will get a fixed rate of interest on their savings, currently 4.83 per cent a year (equivalent to 6.04 per cent for a basic-rate taxpayer and 8.05 per cent for a higher-rate taxpayer). Rates on a five-year plan are slightly lower.
If, at the end of the savings period, the company's price has risen above the share option price, you will clearly be better off exercising the option. If the share price has fallen below the share option price you can just take out your savings.
When you exercise the share option you receive a share certificate stating how many shares your cash fund has purchased. The shares can then be held as an investment or sold. If you hold on to the shares you can keep them tax-free by transferring up to pounds 7,000 into an individual savings account during the 1999-2000 tax year (pounds 5,000 after this).
You can also cash in shares worth up to pounds 7,100 and pay no capital gains tax (providing you have no other gains from selling assets). The CGT allowance is per person, so a you can transfer ownership of some shares to a spouse and sell up to pounds 14,200-worth without paying CGT.
As an example of just how lucrative these schemes can be, a pounds 250-per- month investment in 1991 in the Pearson seven-year SAYE scheme would have produced savings of pounds 15,000 over five years. After another two years, a bonus equivalent to 30 months' contributions, or pounds 7,500, would bring the building society account to pounds 22,500. (For schemes starting now, the equivalent bonus would be 13.5 months' contributions.)
With a share option price of pounds 2.99, the pounds 22,500 would buy 7,525 Pearson shares (in practice only 7,511 shares because of an internal adjustment). Pearson shares were trading at pounds 13.15 on 16 April 1999, giving the 7,511 shares a value of pounds 98,769 if sold on that date.
Even saving just pounds 50 per month over seven years gives staggering returns. In the same scheme a total of pounds 4,500 saved would have been worth pounds 19,725.
Martin Korn, a senior partner at Blick Rothenberg, chartered accountants in London, says these schemes are a good introduction to the stock market. "This really is an ideal vehicle for inexperienced investors because they can gain exposure to the equity market on a risk-free basis."
If you work for a large FT-SE quoted company, ask the human resources department whether there is a SAYE share option scheme. This is an investment designed for those who intend to stay with their employer for several years - but even if you leave, you have still made savings and can transfer them to an ISA when you leave the firm.