Q&As

I understand it is often best (for employers) to keep information about share entitlement separate from the contract to limit the possibility of claims upon termination. Can you provide some guidance?

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Published on LexisPSL on 04/02/2016

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

  • I understand it is often best (for employers) to keep information about share entitlement separate from the contract to limit the possibility of claims upon termination. Can you provide some guidance?

It is best practice to keep information about share entitlement separate from any employment contract. This approach is designed to support the argument that the grantor or employee will not be liable for any loss caused to an option holder in consequence of an option lapsing (or becoming exercisable to a lesser extent) as a result of the termination or change of terms to their employment contract. As a result of the option details being contained in a totally separate agreement, the idea is that it is harder to connect the option rights to the employment rights (ie it helps prevent the employee from being able to pursue a ‘back-door’ employment claim for com

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