What is a Share Incentive Scheme?
A Share Incentive Scheme is a system used by companies to grant their employees an option to obtain certain classes of shares in the Company, as an incentive to the employees.
The options by the employees may either be exercisable after a specific period of time or the option can be linked to the employees’ performance. The granted option can also be offered to the employees at a marked-related value or at a discounted value and may be coupled with certain conditions.
For example, the employees may be required to remain in the employ of the company for three years before the shares would vest in their names. Where the granted option is offered to the employees at a marked-related value or at a discounted value, the employees will not pay for the shares at the time that they are offered the option and will only do so when they exercise the option (at a later predetermined date).
A Share Incentive Trust is typically used as a vehicle to give effect to Share Incentive Schemes.
Types of Share Incentives Schemes
There are three types of Share Incentive Schemes generally used:
Share Incentive Schemes are attractive options to incentivise employees and to enable them to participate in the growth of the company thus enabling increased growth in the way that the company performs.
Noori Edros | Associate | Dispute Resolution: Litigation & Arbitration
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