Q&As

Although the Investment Association Principles of Remuneration require that employee share schemes should not have a life span of more than ten years, is it market practice that SIPs adopted by fully listed companies do not adhere to this? If so, should this be specifically brought to the attention of the shareholders at the time the SIP rules are put forward for their approval?

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Published on LexisPSL on 12/04/2017

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Although the Investment Association Principles of Remuneration require that employee share schemes should not have a life span of more than ten years, is it market practice that SIPs adopted by fully listed companies do not adhere to this? If so, should this be specifically brought to the attention of the shareholders at the time the SIP rules are put forward for their approval?

The Investment Association Principles of Remuneration state at Section C.2.vii that no awards under a share incentive scheme should be made beyond the life of the scheme approved on adoption by shareholders, which should not exceed ten years. Although the Principles of Remuneration are focused primarily on executive remuneration, they also make clear that all-employee schemes, including Share Incentive Plans (SIP) ‘should operate within an appropriate best practice framework’ (Section C.2.xiii).

Therefore, it would be best practice

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