| All Employee Share
Ownership Plan (AESOP) | Tax-advantaged
all-employee share award scheme approved by the Employee Share
Schemes Unit, Somerset House, under ITEPA03/SCH2 (formerly
FA00/SCH8), now known as a Share Incentive Plan (SIP) |
| Approved profit sharing
scheme (APS) | Tax-advantaged
all-employee share award scheme approved by the Employee Share
Schemes Unit under ICTA88/SCH9 until April 2001 |
| Approved scheme | Share award or share
option scheme approved by the Employee Share Schemes Unit, which
gives favourable tax and NICs advantages to employees and
employers |
| Case law trust | Employee share ownership
trust or general purpose EBT which relies on tax case law rather
than specific legislation as authority for allowing tax deductions
for employers’ contributions |
| Company Share Option Plan
(CSOP) | Tax-advantaged
discretionary share option scheme approved by the Employee Share
Schemes Unit under ITEPA03/SCH4 (formerly ICTA88/SCH9) |
| Conditional share
award | An award of a number of
shares of which the employee will become the owner at a future date
if specified conditions are met |
| Discounted option | A share option which
gives the option-holder the right to buy shares at an exercise
price lower than the market value of the shares when the option was
granted |
| Employee Benefit Trust
(EBT) | A trust set up by an
employing company or its group parent company to provide employees
with benefits which may take a variety of different forms |
| Employee share ownership
trust (ESOP trust or ESOT) | A trust set up by an
employing company or its group parent company to provide employees
with benefits in the form of shares or options over shares in that
company |
| Enterprise Management
Incentive (EMI) option | Option over shares in an
EMI company which qualifies for tax advantages under ITEPA03/SCH5
(formerly FA00/SCH14) |
| Exercise of option | When the option-holder
uses the rights under the option to buy shares at the option
exercise price |
| Exercise price | Price at which the holder
of a share option has the right to buy shares |
| Forfeitable shares | Shares given to employees
subject to a risk that they may have to be forfeited if specified
conditions are not met during a forfeiture period |
| Forfeiture period | Period during which
employees holding forfeitable shares are at risk of having to
forfeit them if specified conditions are not met during the
period |
| Grant of option | Giving the option-holder
a right to acquire shares in the future - options must be granted
under seal or deed or for consideration (usually a nominal amount
such as £1) |
| Group scheme | An employee share scheme
set up by the parent company of a group under which share-related
benefits are provided to employees of nominated companies in the
group |
| Long Term Incentive Plan
(LTIP) | Term often used for a
conditional share award scheme or a scheme providing employees with
forfeitable shares |
| Market value option | A share option which
gives the option-holder the right to buy shares at an exercise
price equal to the market value of the shares when the option was
granted |
| Performance
conditions | Conditions or targets
which must be satisfied during a specified performance period
before employees can acquire shares under conditional share awards
or by exercising share options |
| Performance period | Specified period over
which performance conditions or targets, to which share awards or
share options may be subject, must be met |
| Phantom share option | A right to receive a
payment in cash (not shares) based on the increase in value of a
set number of shares over a set period |
| Profit sharing
scheme | See Approved profit
sharing scheme (APS) |
| Qualifying employee share
ownership trust (QUEST) | A trust that meets the
requirements of FA89/SCH5. Favourable tax treatment given for
employers’ contributions to QUESTs in accounting periods
starting before 1/1/2003 |
| Replacement option | A new share option
granted in exchange for the surrender of an old option, usually
when the company whose shares were the subject of the old option is
taken over (see Rollover of options) |
| Restricted shares | Shares acquired by an
employee which are subject to restrictions (such as restrictions on
voting or dividend rights, or the employee’s ability to sell
the shares). Includes forfeitable shares |
| Rollover of options | When an old option is
exchanged for a new option, usually over shares in a new parent
company following a takeover (see Replacement option) |
| Savings-related or SAYE
share option scheme | Tax-advantaged
all-employee share option scheme approved by the Employee Share
Schemes Unit under ITEPA03/SCH3 (formerly ICTA88/SCH9) |
| Share award | An award of a number of
shares of which the employee will become the owner at a future
date, usually if certain conditions are met (see Conditional share
awards) |
| Share Incentive Plan
(SIP) | Tax-advantaged share
award scheme approved by Employee Share Schemes Unit under
ITEPA03/SCH2 (formerly FA00/SCH8), originally known as an All
Employee Share Ownership Plan (AESOP) |
| Share option | A right to acquire a set
number of shares at a set price during a set period |
| Single company
scheme | An employee share scheme
set up by an employing company under which benefits in the form of
shares or options over shares in the employing company are provided
to its employees |
| Unapproved scheme | A share award or share
option scheme which does not qualify for favourable tax and NICs
advantages given to approved schemes |
| Underwater option | A share option whose
exercise price is higher than the current market value of the
shares |
| Vesting | When conditional share
awards become unconditional |
