Share Options & Incentive Schemes

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Blacks Solicitors’ Corporate team regularly provide advice to business owners in relation to Share Options and Incentive Schemes.

Whether it be achieving certain targets within your business (profit or revenue driven), achieving an exit which enables key employees to exercise certain share options (or achieve certain benefits), or be it the creation of a mechanism to share profits with key employees and/or senior management, employee share schemes and benefits are fantastic ways to incentivise, reward, and retain key employees.

If you can offer a fair and viable employee share scheme, or other benefit in your business, you will improve your chances of recruiting key individuals who will help drive your business forwards.

Similarly, if you can offer existing key personnel an employee share scheme or benefit, you will have a much better prospect of retaining key personnel within your business by engendering additional ‘buy‑in’ and motivation from them.

Employee share and benefit schemes are all about the ‘three Rs’:

  • Recruitment
  • Retention
  • Reward

There are variety of different employee share schemes and employee benefits which we can help you create and implement with appropriate input from yourself and your tax advisers in order to achieve your commercial objectives.

Some of the share (or other employee incentive schemes) available include:

  • Enterprise Management Incentive Schemes (EMI Schemes)
  • Save As You Earn Schemes
  • Share Incentive Plans
  • Non‑Tax Advantage Share Option Schemes
  • Employee Benefit Trusts
  • Long‑Term Investment Plans

Frequently Asked Questions

What is the best way to reward and incentivise key staff and/or senior management?

The answer entirely depends on your objectives and motivation and, indeed, that of the individuals concerned. As ever with these types of arrangements, tax efficient schemes are naturally the most popular and we would recommend a consultation with our team to discuss your requirements and how we can best achieve those objectives.

Can you rescind a share option after it has been issued?

In short, the answer is yes. However, you would need to carefully think about the reasons for granting a share option in the first place and the message that it would be sending, if you reserve the right to rescind the option.

In such a circumstance, we would recommend that the company does retain some element of control over the share options; for example, if a key employee were to leave the business before the exercise of the option, we would recommend that it lapse and we would suggest this is a reasonable commercial position to take which would not offend the individual concerned (depending on the specific circumstances).

 

If you would like to discuss employee share option schemes and/or any other employee benefit schemes, please get in touch with our Corporate team today via email or on 0113 207 0000.