Fully Taxable Share Schemes and Agreements

This practice note examines the impact of the statutory rules against age discrimination on employee share schemes. For a checklist based on this note, see Checklist, Age discrimination and employee share schemes.

This note sets out survey data on aspects of deferred annual bonus plans operated by FTSE 100 and FTSE 250 companies. The data is taken from the 2006 KPMG survey of directors' compensation. This market intelligence may be useful background information for companies planning to introduce a deferred bonus matching scheme. The note contains links to further PLC material on deferred annual bonus plans where appropriate.

This note outlines the issues to consider when an employee holding share options or other share awards leaves the company for any reason or dies. The issues considered include: Determining whether the employee is actually treated as leaving under the rules of the relevant share plan. Determining the reason for leaving (for example, injury, ill-health, disability, redundancy, retirement, dismissal by the company or voluntary resignation). The effect of different leaver provisions in share plan rules, and the statutory leaver requirements for HMRC-approved share plans. Interaction with employment law and HR processes, such as drafting a compromise agreement, and considering whether the leaver may claim compensation for loss of rights under a share scheme. The tax and national insurance contributions ("NICs") implications of a share plan participant leaving the company or dying in service are dealt with in a separate note (see Practice note, Employee share schemes: tax and NICs issues for leavers).

The definition of employment-related securities is essential for several provisions under which income tax (and potentially also NICs) can arise where securities are acquired or held by or for employees or directors. Some of these tax charges arise frequently and are important in many situations. This practice note examines the meaning of securities and employment-related for the purposes of these tax charges.

This note explains why companies may need to take into account the size of their distributable profits when planning or running a share scheme. A flowchart illustrates methods of sourcing shares for share schemes for companies with limited or no distributable reserves.

This is a summary of some major cases relevant to share schemes in which the decision was published before February 2007 (roughly when PLC Share Schemes & Incentives began producing its own legal updates about cases).  Cases published from February 2007 are covered in separate legal updates which can be accessed from each share schemes topic page by clicking on the "Legal updates" tab.

This note considers whether former employees can participate in a company's unapproved share plan after leaving employment, if they continue to provide consultancy services to that company.

Most listed companies impose performance conditions on the exercise of share options. This note illustrates the performance conditions used in FTSE 100 and FTSE 250 executive share option plans operating in 2006. The data is taken from KPMG LLP 2006 Directors' remuneration survey

This note illustrates the performance conditions used in FTSE 100 and FTSE 250 executive share option plans operating in 2008. The data is taken from KPMG's Survey of Directors' Compensation 2008.

This practice note shows the relative popularity of different types of performance measure in performance share plans operated by FTSE 100 and FTSE 250 companies in 2009.

This note sets out survey data on aspects of deferred bonus plans operated by FTSE 100 and FTSE 250 companies in 2010. This market intelligence may be useful background information for companies planning to introduce a deferred bonus plan.

This note shows the relative popularity of different types of performance measure used in executive share option plans operated by FTSE 100 and FTSE 250 companies in 2010.

This practice note shows the relative popularity of different types of performance measure in performance share plans operated by FTSE 100 and FTSE 250 companies in 2011.

This checklist summarises the advantages and disadvantages of using nil or partly paid shares in an employee share scheme rather than share options. For general information on nil paid share schemes, see Practice note, Nil paid share schemes: an overview. In a share incentives context, nil paid shares are much more common than partly paid. As a result, in this checklist, all references will be to nil paid, although the same principles apply to partly paid shares.

This note explains the issues relating to insolvency law which can arise in relation to nil paid share incentive schemes. For general information on nil paid share schemes, see Practice note, Nil paid share schemes: an overview.

Lots of jargon and acronyms are used in share schemes and incentives practice, many of which are very similar.  These unfamiliar terms can make it difficult for newcomers  to quickly pick up on the basics of share schemes law and practice.  This jargon buster is intended to help those new to share schemes to navigate their way around the jargon and acronyms used by share schemes practitioners.

Fewer private than listed companies offer share incentives even though share plans can provide advantages for private companies. This note explains the share scheme issues specific to private companies and how they might be resolved.

SARs are incentive arrangements which are similar in economic effect to share options. SARs differ from options as they provide the value equivalent to the gain made on the exercise of a fully-taxable share option without the need for a participant to fund an option exercise price. If a SAR is settled in shares, the company will use fewer shares than under an equivalent option. If a SAR is settled in cash, no shares will be used.

Listed companies planning to satisfy options or awards under employee share plans by funding an employee benefit trust (EBT) to acquire market purchase shares may need to consider an appropriate share hedging strategy to ensure that the EBT holds sufficient shares to satisfy all options and awards that are likely to vest.

This note explains how employees holding shares, interests in shares, share options and share awards are dealt with when the shares of a private company are sold under a sale and purchase agreement. It also considers the practical issues companies may need to address in relation to employee share options and awards on a share sale.