ESSUM35550 - Requirements relating to share options - exercise rights: Death of an option holder
If the option-holder dies before the bonus date, exercise must be permitted within twelve months of death and rights unexercised at the twelve month point must lapse.
If the option-holder dies in the six months after the bonus date the scheme rules must provide a right of exercise only in the twelve months following the bonus date.
When a participant ceases employment before the bonus date the option will normally lapse unless cessation is for a good leaver reason (ESSUM35610) or for a transfer of employment out of the group (ESSUM35650). Where the option has not lapsed and the participant dies during the six month period allowed for exercise then the scheme must provide that the option exercise period does not end until 12 months after
- the date of death, if the employee died before the bonus date
- the bonus date, if the employee died after the bonus date.
It is not permitted for personal representatives to make further contributions under the savings contract before the option is exercised.
Scheme rules must make clear that options cannot be exercised after the death of an option-holder if the option-holder had a material interest under paragraph 11 at the date of death.
The following table sets out what happens in the various circumstances where a participant dies
| Employment status | Death occurs | Exercise provision |
|---|---|---|
| As employee |
Before bonus date |
12 months from date of death |
| As employee |
Within 6 months of bonus date |
12 months from bonus date |
| Ceased for good leaver reason |
Before bonus date & within 6 months of cessation |
12 months from date of death |
| Ceased by reason of transfer out of group |
Before bonus date & within 6 months of cessation |
12 months from date of death |
| Ceased for good leaver reason |
After bonus date & within 6 months of cessation |
12 months from bonus date |
| Ceased by reason of transfer out of group |
After bonus date & within 6 months of cessation |
12 months from bonus date |
| Ceased for any other reason |
After cessation |
No right to exercise as option will normally have lapsed upon cessation |
