Corporate transactions and share schemes

Corporate transactions will more often than not have a major impact on subsisting employee incentives (options and awards).

In the context of a corporate acquisition, the potential purchaser will typically wish to avoid having any minority shareholders or individuals with rights over shares once the takeover has occurred. Therefore, it will be focussed on either ensuring that any pre-existing options and/or awards are either realised in full (with the acquiring company purchasing the resulting shares pursuant to the terms of the transaction) or that those options/awards lapse and cease to be exercisable immediately prior to the takeover.

Participants in the target's share plans will also be expecting to realise their rights so that they can sell their shares alongside the target's other shareholders.

The employee incentives issues and considerations relating to a corporate transaction will depend primarily upon the nature and mechanics of the relevant transaction and the governing terms and structure of the particular share incentive awards. Different issues may also arise depending upon whether the company is publicly listed or not.

For a general high level summary of the key share incentives