Our Corporate & Commercial Team advise companies on all aspects of their corporate law requirements including employee incentive schemes and arrangements.
What are Employee Incentive Schemes?
Incentive schemes generally take the form of a share incentive arrangement with the company issuing either shares which are subject to certain rights or restrictions or share options entitling the holder to exercise and own the shares at a point in the future when certain thresholds or targets are met by the employees.
Why do Companies Implement Employee Incentive Schemes?
Companies may decide to implement management or employee incentive arrangements to achieve buy-in from executives in the expansion of a company and as a reward for their contribution to its growth.
Our Employee Incentive Scheme Expertise
Our Corporate & Commercial Team regularly advise companies on Employee Incentive Schemes and Arrangements including:
Good & Bad Leaver Provisions: It is important in any share scheme that the shares are capable of being bought back or that the options lapse once the employee becomes a leaver.
Growth Share Schemes: Shares may be growth shares entitling the holder to participate in the growth of the company above today’s valuation.
Restricted Share Schemes. Where a share incentive scheme is based on the issue of shares, such shares may be restricted shares meaning the holder is restricted for a specified amount of time in respect of their sale or transfer. Restricted shares are held by a trustee and do not have voting.
Share Option Schemes: An employee share option scheme involves the issuing of options over shares. The options may be exercisable on a specified date in the future, for example after the employee has remained with the company for a specified amount of time or after the attainment of specified targets. The options may also be exercisable if there is a sale of the company.
Share Scheme Documents: For any share scheme, our Corporate & Commercial team will prepare scheme rules, trust deeds, shareholder agreements and option letters.
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