The following Share Incentives practice note Produced in partnership with Jeremy Glover of Fenwick Elliott provides comprehensive and up to date legal information covering:
Deferred share bonus plans are typically constituted by the following key elements:
they are structured as employees’ share schemes as defined in section 1166 of the Companies Act 2006 (CA 2006)—see Practice Note: The Companies Act definition of employees' share scheme and its implications
participants are typically also participants in the company’s annual bonus plan. Participation will usually be at the discretion of the directors/remuneration committee
participants may either be required to defer a proportion of their bonus under the annual bonus plan or may be invited voluntarily to defer a proportion of their bonus under the plan
participants will receive an award relating to shares in the company in lieu of the proportion of their cash bonus deferred into the deferred share bonus plan
participants will commonly be provided with the opportunity or right to receive free additional matching shares from the company which will vest at some point in the future
the additional matching shares will normally be subject to performance targets (usually corporate targets) and will vest (ie will be released to the participant who may choose to retain or sell them) after a period of normally at least three years, and
typically, if the participant ceases relevant employment save for in specified circumstances, any unvested shares will be forfeited
Deferred share bonus plans are structured
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