Adapting To The Times
As economic conditions change, companies are adapting their equity incentives.
Many of our clients, especially private companies, are looking to amend the performance conditions attaching to options, including Enterprise Management Incentive (EMI) options. We can re-assure such companies that HM Revenue & Customs will not normally disqualify an EMI option because of changes to the performance conditions. HMRC will object, however, if there are changes which accelerate option vesting or reduce the exercise price. Please call us free on 020 8949 5522 if you would like more information or contact us.
Quoted companies have to contend with guidelines issued by the Association of British Insurers ("ABI"). These contain complex provisions designed to prevent companies giving too many equity benefits to their staff at the expense of institutional shareholders. In particular, the ABI frowns on repricing of options or alterations to performance conditions. Larger quoted and listed companies will usually take note of these restrictions, but our advice to smaller quoted clients is that (i) the guidelines have no regulatory force and (ii) what matters most is that the company's remuneration policy is supported by its main institutional shareholders. So communication with key investors is important.
All of these matters are discussed at length in the 2008/09 edition of "employee share schemes - A Guide for Directors".