As employee share arrangements become more common so do the instances that threaten to derail them<\/p>\n
<\/p>\n
Is anyone else feeling that the Budget cannot come soon enough, so we can all get on with our lives?\u00a0 I never like this phase when all you have is speculation and uncertainty.<\/p>\n
Nonetheless, assets still need valuing and we are busily getting on with exercises around planning for the changes to BPR, serving the needs of companies that are fundraising and engaged in M&A, and setting up employee share arrangements.<\/p>\n
We have seen a recent trend in employee share arrangements (ranging from EMI schemes through to growth shares and the rest) which undergo a corporate action that means the equity value of the company is denuded whilst share arrangements are still out of the money.<\/p>\n
These actions may make it more difficult for a company to reach a hurdle condition and make it harder for the value an option holder can realise in the future.<\/p>\n
We often get asked: \u201cWhat, if any, compensation should we pay to the option holders and if there is compensation due, how should we award it?\u201d<\/p>\n
We also get asked about what HMRC might think\u2026<\/p>\n
Anyway, each case is unique, but it did make me wonder whether you, as lawyers, might have an opportunity here to pre-emptively solve the problem before it arises?<\/p>\n
In certain circumstances, it might be a good idea to work into the share scheme arrangements a mechanism for how compensation could be paid. Previously, we have examined how shareholders might be compensated by granting additional options, adjusting the exercise price, or adjusting UMV\/AMV.<\/p>\n
I hope this gives you a reason to call your clients about the extant arrangements you have advised on and will also be useful when you are setting up new ones.<\/p>\n","protected":false},"excerpt":{"rendered":"
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