The following Share Incentives practice note Produced in partnership with Stephen Woodhouse and William Franklin provides comprehensive and up to date legal information covering:
Jointly owned awards are no more and no less than their description implies, namely shares owned jointly by an employee or director and a third party, either an investor in the company or, more commonly, the trustees of an employee benefit trust (EBT).
The concept of jointly owned share ownership was developed as an alternative to other forms of shares incentives such as share options, restricted shares or performance shares plans (often using nil-cost options).
For more general information on joint share ownership plans (JSOPs), see Practice Note: Introduction to joint share ownership plans.
This practice note seeks to compare JSOPs with other forms of unapproved share scheme structures. The difficulty with conducting an exhaustive review is that there a multitude of different structures and approaches and variations on a theme of all of them.
In this practice note, a comparison has been drawn, as far as possible, between JSOPs and each of the following three types of arrangements:
unapproved share options
long-term incentive plans (LTIPS), and
For further comparisons, see Practice Notes: The advantages and disadvantages of each share incentive arrangement and Selecting the right share scheme.
The economic profile of a JSOP award is similar to a share option in that the employee is participating in growth in value above a set level. With a share option, the ‘threshold level’ would normally be the
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