Conditional share award meaning

What is a long-term incentive plan? As set out in the Practice Note: What is a long-term incentive plan?, the awards most frequently delivered under a long-term incentive plan (LTIP) typically comprise: conditional share awards (often referred to in the US as restricted stock units (RSUs)) nil-cost options share appreciation rights (SARs) forfeitable shares, sometimes described as restricted stock A brief summary outline of the likely capital gains tax (CGT) treatment on disposals of shares obtained on the vesting of each LTIP award type is set out below. For more detail and background on the different award types available under an LTIP, see Practice Note: Structure of a long-term incentive plan—Types of awards for further guidance. Please note that this Practice Note proceeds on the basis that, at acquisition of the shares or otherwise on vesting of the LTIP awards, the employee has been fully subject to income tax and, where the shares are readily convertible, national insurance...

What are growth shares? Growth shares, sometimes called value shares or hurdle shares, are a distinct share class with limited rights. Those rights are structured so that staff only share in increases in the company’s worth arising after an acquisition. As a result, they broadly mirror the economics of an option where the exercise price is set at market value (or includes a premium). For a comparison of growth shares with share options, see Practice Note: Growth shares—practical examples and comparisons with options. Their restricted rights focus returns on value created after the acquisition, rather than on historic value at acquisition for the company specifically. Key elements of growth shares The employee acquires the growth shares up front—unlike a share option or a conditional share award, under which the individual receives shares at a later date only once specified conditions have been satisfied. The principal tax advantage of using this structure is that any increase in the company’s value after the employee has...

Types of awards An LTIP can deliver a range of award forms, and a single plan may include more than one type. Commonly used awards include: conditional share awards (also known as restricted stock units) share options forfeitable shares (often called restricted shares) stock appreciation rights Conditional share awards (or restricted stock units) A conditional share award, or restricted stock unit (RSU), is a commitment to issue shares once specified service and/or performance requirements are achieved. Recipients typically pay no monetary consideration for the shares; instead, they must satisfy the vesting conditions, after which the vested shares are transferred to the holder without further action... Share options A share option gives the right to purchase company shares at a predetermined exercise price at a future time, usually once service and/or performance criteria are met. Within an LTIP, options are often granted at nil‑cost or at nominal value, meaning the exercise price is set at zero or at...

Parties This Agreement is made on [ date ] between the following parties as set out below: [ name of employer ] [ Limited OR Plc ], a company incorporated in [ England and Wales ] (registered number [ registered number ]), whose registered office is at [ registered office address ] (the Company); and [ name of executive ] of [ address of executive ] (the Executive). Together they are referred to as Parties. Background The Company and the Executive are parties to the [ Employment Agreement OR Bonus Agreement ] (as defined below), under which the Executive may receive a discretionary annual bonus. The Executive has received a conditional award of the Bonus (as defined below) for [ insert relevant year/performance period ]. The Company and the Executive intend to enter into this Agreement to describe the circumstances in which the Company may reclaim all or part of the Bonus in certain specified circumstances......

This certifies you hold a Restricted Award to acquire up to the maximum Shares in [ insert name of Company whose shares are being granted under award ]. Granted on the Date of Grant under a global deed executed by the Company [ and subject to the Performance Target(s) attached ]. Made under the Plan Rules. You must sign a Participant Agreement within [ 30 ] days of grant to accept the Restricted Award, otherwise it will lapse. Read the enclosed agreement and return it signed to [ insert name AND CONTACT DETAILS ] by [ insert TIME AND DATE ]. The Award will not normally Vest before the date above [ and remains conditional on the Performance Target(s) being met or waived ]. [ It will lapse automatically if you leave the Company or any Associated Company, save for the limited cases in the Rules ]. It is non-transferable and will lapse if you try to sell, assign, transfer, pledge, charge or otherwise encumber it. Unless otherwise...

[ insert name of company who granted the award pursuant to the long term incentive plan (LTIP) ] ( Company ) [ insert name of LTIP ] ( Plan ) Name Number of Shares referenced for the Cash Award Date of Grant Normal Vesting Date [ , conditional upon satisfaction of Performance Targets ] We hereby confirm that you are entitled to a Cash Award, detailed in the manner set out within the table above...

Net settling a share award Net settling a share award is employed to cut down the quantity of shares a company is required to issue in order to discharge the award. Awards can, in principle, be net settled against both any exercise price due and any tax or National Insurance contributions (NICs) that arise. Key benefits of net settlement include reduced dilution for existing shareholders and the possibility for a company to stretch its headroom under any relevant dilution limits, thereby enabling those limits to accommodate more awards. Net settlement for tax and NICs means the company issues to the award holder a number of shares whose value equals the post‑tax amount they would have retained had they taken the full, gross allocation and sold sufficient shares on‑market to meet the pay as you earn (PAYE) and NICs obligations due at that point in time in practice. The company then settles the PAYE and NICs by remitting a cash payment to HMRC...