Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Malus definition

What does Malus mean? Malus describes a contractual mechanism in executive remuneration and employee share plans that lets the employer or remuneration committee reduce or cancel some or all of an unvested award before vesting if specified adverse events occur. It is a descriptive term rather than one generally defined in primary legislation or case law; its operation is set out in plan rules, employment contracts and, for regulated firms, remuneration codes. Typical malus triggers include misconduct, error or misstatement of results, risk management or compliance failures, material financial loss, reputational damage, and insolvency or serious corporate failure. Malus is distinct from clawback,...

Malus and Clawback in UK Executive Remuneration: Regulatory Context, Triggers, Periods, Enforcement, Drafting and Tax

Published by a LexisNexis Share Incentives expert

Practice notes

The use of Malus and Clawback

The concept that performance-based cash or share awards for executives and senior employees can be reduced (malus) or recovered (clawback) when a material adverse event occurs or later comes to light is now widely accepted and embedded in market practice. Although rooted in the financial services industry, malus and clawback are now standard elements of incentive plans operated by companies listed in the equity shares (commercial companies) category in the UK. This development flows directly from the Financial Reporting Council’s (FRC) 2014 revisions to the UK Corporate Governance Code in Response to the global financial crisis, together with the subsequent expectations of the UK’s major institutional shareholders. The Department for Business, Energy & Industrial Strategy’s (BEIS) March 2021 consultation on modernising the UK’s audit and corporate governance regime further reinforces that deploying malus and clawback within executive remuneration is a vital mechanism for advancing a company’s overall corporate governance objectives...

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Nick Hipwell

DLA Piper

Nick Hipwell is a Partner in DLA Piper, based in London. Prior to this, Nick was a Partner in Deloitte’s Reward practice and led the incentive plans legal team, which was made up of a team of lawyers in London and a wider national team. Before joining Deloitte as a Partner in 2011, Nick spent over ten years at Clifford Chance.Nick has designed, drafted and implemented incentive plans for both listed and unlisted companies, including many which are private equity owned. Nick has implemented plans for both executives and the wider employee population and these plans have related not only to shares and cash but also to other securities, including debt instruments. Nick has particular experience in the implementation of employee share plans globally and has acts acted for some of the world’s largest companies, including members of the FTSE 30, the Euro Stoxx 50 and the...

Sarah Ferguson

Bird & Bird

Sarah Ferguson is a Partner at Bird & Bird, based in the London office and specialising in incentives. Her particular focus is advising on the establishment and operation of employee share plans (both in the UK and internationally), including tax-favoured enterprise management incentive (EMI) option plans, long-term incentive plans (LTIPs), tax-advantaged company share option plans (CSOPs), share incentive plans (SIPs) and sharesave (SAYE) plans. Sarah has almost 15 years' experience of advising both listed and private companies on their executive remuneration and all-employee incentive structures, including the design, implementation and operation of share-based and cash-based plans, their global implementation, related trust and tax work, and support on large cross-border transactions.Sarah joined Bird & Bird in September 2023, having previously worked at DLA Piper (as a legal director for 3 years), Tapestry Compliance LLP (as a senior associate for over 5 years), Slaughter and May (as a...

Rasmus Berglund

Macfarlanes

Rasmus is a partner in the Macfarlanes Reward practice. With more than 17 years’ experience, he specialises in all aspects of UK and international employee and executive incentive arrangements.Rasmus’s practice includes the design, implementation and operation of a wide range of employee share plans and executive remuneration arrangements as well as the treatment and negotiation of incentives in the context of corporate transactions.He advises on all share plan-related matters including individual and corporate tax and structuring, global regulatory compliance, trust and nominee arrangements, plan administration, data protection and employment issues. Rasmus has a particular focus on corporate governance and remuneration disclosure for listed companies and, having spent time on secondment with one the largest UK banks, also advises on UK and European remuneration regulation within the financial services sector.Rasmus is a member of the Share Plan Lawyers Group and on the Steering...

Clio Pialorsi

Macfarlanes

Clio advises both listed and unlisted clients on the design, implementation and operation of equity-based incentive plans.She has extensive experience advising listed companies on multi-jurisdictional incentive plan issues and large-scale incentive arrangements, including UK tax-advantaged plans. Having spent time on secondment within the reward and mobility tax teams of a large global bank, she has a deep understanding of the financial services sector.With a focus on tax compliance, Clio also advises on the impact of M&A transactions on share schemes and specialises in accounting valuations for share-based payments.Clio is a Chartered Tax Adviser and a member of the Chartered Institute of Taxation (CIOT). She is trained in mental health advocacy in the workplace and volunteers at suicide-prevention charity The Listening Place....

Web page updated on 21/05/2026

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