| 1 | Accounting for share schemes: an overview Most companies must record an expense in their profit and loss accounts for share-based payments. This note is an overview of the main concepts and issues involved in accounting for share schemes. Accounting considerations can influence share plan design. This note is aimed at subscribers who are not accountants and provides a brief introduction to what can be a complex and specialist area of accounting practice. | Practice note: overview | Maintained |
| 2 | Share scheme issues for listed companies: a quick guide This is a quick guide to the main share scheme issues for companies listed on the main market of the London Stock Exchange. It is part of a series of quick guides to share schemes and is also one of a series of quick guides on many other subjects, see Quick guides. | Practice note: overview | Maintained |
| 3 | Share scheme issues for private companies: a quick guide A quick guide to the key issues for private companies when offering share incentives to employees.This is one of a series of quick guides, see Quick guides. | Practice note: overview | Maintained |
| 4 | Sourcing shares for share plans: an overview Companies need to consider the most effective means of sourcing the shares needed to satisfy options and awards granted under employee share plans. This issue is particularly important for plans under which the participant does not pay anything to receive the shares, such as long term incentive plans (LTIPs). Listed companies have three potential sources of shares for share plans: new issue shares, market purchase shares and treasury shares. This practice note provides an overview of the issues companies need to consider when deciding which shares to use. | Practice note: overview | Maintained |
| 5 | What is a performance condition?: an overview Many employee share awards are subject to the fulfilment of performance conditions. This note is a brief explanation of performance conditions. | Practice note: overview | Maintained |
| 6 | Accounting for share schemes: an example comparing the ... The international accounting standard IFRS 2 requires companies to recognise share-based payment transactions (accounting charges, financial position and disclosure) in their financial statements. It is necessary for companies to account for all share incentives, including share option schemes. This note sets out an example comparing the profit and loss account treatment of a share option compared with the treatment of a long term incentive plan award. | Practice notes | Maintained |
| 7 | AIM companies: share schemes issues This note sets out the legal, corporate governance and tax issues that arise for a company quoted on AIM operating share schemes for its employees. | Practice notes | Maintained |
| 8 | Categorising performance conditions: a brief guide Executives will normally only benefit from incentive schemes if pre-set performance conditions are fulfilled. It is useful to understand the main categories of performance conditions. This understanding helps explain why particular performance conditions are chosen. Also, it is essential to be able to distinguish some categories of performance conditions to establish the correct accounting treatment of the share plan. | Practice notes | Maintained |
| 9 | Comparing characteristics of new issue shares, market ... Companies typically (but not always) use an employee benefit trust (EBT) as a vehicle for delivering shares for employee share schemes. The table below compares the main implications of sourcing shares for employee share schemes from: newly issued shares issued to an employee benefit trust; market purchase shares held in an employee benefit trust, and treasury shares held by the company. Note the warning paragraph above the table about aspects of it that are out of date. | Practice notes | 16-May-2013 |
| 10 | Designing long-term incentives for companies in difficulties One size does not necessarily fit all when it comes to the design of long-term incentives. Shareholders of companies in financial difficulty will be desperate to see business performance improve and will want high calibre executives in place to turn the company around. In this note, Calvin Jackson of Towers Watson argue that market-norm standard share incentive arrangements for key executives in poorly performing companies can be inappropriate and, indeed, counter-productive. Jeff considers how thoughtful plan design can reward shareholders by focusing executives on exactly what they need to do to get the company back on its feet. | Practice notes | Maintained |
| 11 | Dilution Modelling Spreadsheet Tool User Guide This is the user guide for the share plan dilution calculator. We would be particularly grateful for feedback on this user guide and the spreadsheet. Please contact us by using the contact the team button on the top right of this note. | Practice notes | Maintained |
| 12 | Employee share schemes: loans to employees and directors ... An overview of the application of the Consumer Credit Act 1974 to loans to employees or directors made or arranged by the company in the context of an employee share scheme. | Practice notes | Maintained |
| 13 | Flowchart: Companies with limited or no distributable reserves This note explains why companies may need to take into account the size of their distributable profits when planning or running a share scheme. A flowchart illustrates methods of sourcing shares for share schemes for companies with limited or no distributable reserves. | Practice notes | Maintained |
| 14 | Flowchart: share plan design: sourcing shares for companies ... This practice note sets out a summary of the institutional shareholder share plan dilution limits. It includes a flowchart illustrating how companies with restricted headroom can source shares for use in share schemes. | Practice notes | Maintained |
| 15 | Funding employee benefit trusts: financial assistance, UITF ... Companies often establish an employee benefit trust (EBT) to satisfy employee share options and awards. Funding an EBT to acquire shares can cause difficulties for public companies under the company law financial assistance rules. This practice note sets out the issues and some possible solutions. | Practice notes | Maintained |
| 16 | Implementing a share plan: notice and majority requirements ... When implementing a share plan you may need to build in time to obtain shareholders' approval. This note is a quick summary of the minimum notice times. It also contains a reminder of the majority voting requirements for obtaining shareholder approval. Note that the law on notice requirements and company meetings changed on 1 October 2007. | Practice notes | Maintained |
| 17 | Important share schemes and incentives cases before ... This is a summary of some major cases relevant to share schemes in which the decision was published before February 2007 (roughly when PLC Share Schemes & Incentives began producing its own legal updates about cases). Cases published from February 2007 are covered in separate legal updates which can be accessed from each share schemes topic page by clicking on the "Legal updates" tab. | Practice notes | Maintained |
| 18 | Internal rate of return (IRR): an introduction This note introduces the concept, use and calculation of internal rate of return as a measure of performance in private equity investments. | Practice notes | Maintained |
| 19 | Long term incentive or performance share plans (LTIPs/PSPs) ... LTIPs (also known as PSPs) are now commonly used as an alternative to share option plans to provide incentives for senior executives. This practice note sets out the main reasons why LTIP awards have become more popular than share options in listed companies. | Practice notes | Maintained |
| 20 | Performance conditions for matching shares in deferred ... This practice note sets out the performance conditions governing the release of matching shares in deferred annual bonus plans. The data is taken from the KPMG LLP 2006 survey of directors' remuneration. | Practice notes | 23-Oct-2006 |
| 21 | PLC Share Schemes & Incentives jargon buster: types of ... | Practice notes | Maintained |
| 22 | Private companies and share plans Fewer private than listed companies offer share incentives even though share plans can provide advantages for private companies. This note explains the share scheme issues specific to private companies and how they might be resolved. | Practice notes | Maintained |
| 23 | Share appreciation rights (SARs) SARs are incentive arrangements which are similar in economic effect to share options. SARs differ from options as they provide the value equivalent to the gain made on the exercise of a fully-taxable share option without the need for a participant to fund an option exercise price. If a SAR is settled in shares, the company will use fewer shares than under an equivalent option. If a SAR is settled in cash, no shares will be used. | Practice notes | Maintained |
| 24 | Share options: the difference between the face and fair value ... This short note explains the difference between the face value and fair value of a share option. | Practice notes | 05-Oct-2007 |
| 25 | Share plan implementation process: key steps This note sets out the key steps involved in establishing a share plan. The UK regulatory framework needs to be considered throughout the whole share plan implementation process, in particular, when designing and drafting the plan documentation and implementing the plan. | Practice notes | Maintained |
| 26 | Sourcing shares for share plans: share hedging strategies Listed companies planning to satisfy options or awards under employee share plans by funding an employee benefit trust (EBT) to acquire market purchase shares may need to consider an appropriate share hedging strategy to ensure that the EBT holds sufficient shares to satisfy all options and awards that are likely to vest. | Practice notes | Maintained |
| 27 | Tax and accounting implications of funding an employee ... To satisfy share awards under employee share schemes of various types, companies may fund an EBT to enable it to purchase shares. EBTs are widely used by quoted companies to purchase shares in the market which will be used to satisfy long-term incentive plan awards or share options. Private companies may also use them to support the operation of their employee share schemes. This practice note is a brief explanation of the tax and accounting implications of funding an EBT. | Practice notes | Maintained |
| 28 | The ABI approach to leaver provisions This note considers the ABI's approach to leaver provisions in share scheme rules. | Practice notes | Maintained |
| 29 | Treasury shares: use in share plans This practice note explains what treasury shares are and the reasons treasury shares are seldom used in practice as the source of shares for long term incentive plans (LTIPs). | Practice notes | Maintained |
| 30 | Underwater share options The problem of underwater share options arises every time there is a significant market downturn, so underwater options is a cyclical topic of interest to companies and share plan advisers. They can cause difficulties for companies who have to balance the demands of disgruntled option holders with satisfying the demands of their shareholders, who are unlikely to want companies to provide "replacement" remuneration. | Practice notes | 10-Apr-2013 |
| 31 | Valuing employee shares There are a number of different reasons why the shares of an unquoted company will need to be valued and in certain circumstances that value will also need to be agreed with HM Revenue & Customs Shares and Assets Valuation. This practice note deals specifically with the valuation of shares for the purposes of employee share schemes. | Practice notes | Maintained |