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Implementation of Share Option Scheme

Facts

The owner of a company, which purchased a business, identified a key staff member that he wished to include in his long-term plans for the business.

Our Advice

At the time the business was struggling, so we advised that options over shares should be issued to the individual whilst the shares were of low value.

The options were structured under an HM Revenue & Customs approved scheme and the individual had rights to exercise the shares in a window starting from three years after they were issued.

Outcome / Savings

The company turned around the fortunes of the business, such that the company’s shares are worth many more times their value, than at the time when the individual was granted the share options.

The individual exercised the options recently and acquired shares from the main shareholder. The exercise of the share options triggered tax savings of over £600,000, shared between the company and its shareholders.