The necessity and design of UK sub-plans to foreign share option plans
Produced in partnership with Jeremy Edwards of Baker McKenzie and Gill Murdoch

The following Share Incentives practice note produced in partnership with Jeremy Edwards of Baker McKenzie and Gill Murdoch provides comprehensive and up to date legal information covering:

  • The necessity and design of UK sub-plans to foreign share option plans
  • Offering share options to employees internationally
  • Is it necessary to have a UK sub-plan?
  • What drafting approach should be used for the UK sub-plan?
  • Alternatives to a UK sub-plan
  • Authority to adopt a UK sub-plan
  • Enforceability and compliance considerations
  • Design of a UK sub-plan
  • Common provisions for tax favourable UK sub-plans
  • Provisions outside tax favourable regimes
  • More...

The necessity and design of UK sub-plans to foreign share option plans

Offering share options to employees internationally

Companies with a global employee footprint face the question of how standardised and uniform to make their employee share option plan. This is not a binary question, but more of a sliding scale. Starting at one end of the scale is a strict one plan fits all approach without any local customisation, which leads into allowing varying degrees of localisation, all the way through to the other extreme of potentially having a separate plan for each country (or group of countries).

While a global approach is usually easier to administer because there is consistency and equal treatment between employees, it can create local compliance issues. Having separate local plans allows a company to meet those local obligations as well as any employee expectations. The trade off is that there are differences in administration and differences in how employees are treated, which can be particularly tricky if the company has a highly mobile workforce.

This is where the middle ground of a UK sub-plan or UK addendum can be helpful.

Is it necessary to have a UK sub-plan?

This is the first question for global companies bringing their share option plan to the UK.

As the UK has a flexible regime when it comes to employee equity awards, the typical answer is ‘no—it is

Popular documents