Company Share Option Schemes

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Company Share Option Schemes

A share option is where the employee is granted a right to acquire shares at the end of an agreed option period for a price at the date the option is granted.

The main reason for using employee share incentive plans is to recruit, retain and motivate employees. They are also used to help align the interests of the employees, particularly senior executives, with those of shareholders. The aim of this alignment is to encourage employees to consider the best interests of the company and shareholders in their management of the business as they potentially have a future equity interest in the business.

Employee share incentive plans can also reduce employment costs because not only does such scheme save you money (as the grant of options can replace bonuses) but it should also be tax efficient for the employer and employee.

There are various HM Revenue & Customs Approved Schemes:

  • Company share option plan (CSOP)
  • SAYE option scheme (save as you earn, saving related or share save option scheme)
  • Share Incentive Plan (SIP)
  • Enterprise Management Incentive (EMI) Share Options.

The scheme most appropriate to the employer will depend on the employer’s structure, size and requirements.

Of course, the employer also needs to bear in mind that it is potentially giving an employee or employee’s shares in the business, and will need to consider whether this is best suited for its company and their own future plans for the business.

Our corporate team will work closely with the company accountant, or can refer you to a specialist and ensure that the shares are valued properly and HMRC are kept fully informed of the proposed implementation of any such share scheme. It is very important that the tax issues are dealt with appropriately.

If you are considering setting up a share scheme, please give us a call to discuss, so we can ascertain your requirements and advise on whether and which share option scheme is suitable for your company.

To talk to one of our corporate solicitors, call us today in confidence on 01895 207264. Alternatively, you can email us at