Glossary

Company Share Option Plan

An option scheme providing income tax advantages for UK employees working for independent companies. Requires prior approval by HM Revenue and Customs. Also known as CSOP.

EMI option scheme

An option scheme providing income tax advantages for UK employees working for smaller, qualifying and independent companies. Also known as EMI options, EMI option plan, EMI share option.

Employee benefit trust

A discretionary trust for the benefit of employees of a particular company or group of employees. Also abbreviated to EBT or called an employees' trust, employee trust, employees' share trust, employee share ownership trust or ESOT.

Employee share ownership plan

A generic term describing any kind of employee share plan or employee share scheme. Often abbreviated to ESOP. Also used to describe an arrangement involving an employee benefit trust.

Growth shares

Describes an arrangement under which shares in a company are jointly acquired by an employee and an employee benefit trust. The value of the trust's interest in the shares is normally fixed at the same level as the shares' worth when they are acquired, whereas the value of the employee's interest is based on any growth in value of the shares after their acquisition.

Hurdle shares

Shares of a special class which only acquire a capital value if the value of the whole company exceeds a specified threshold.

Long term incentive plan

Normally a form of unapproved option scheme in which options are granted with an exercise price of zero but may only be exercised if a performance target is achieved.

Nil paid shares

Describes an arrangement under which an employee acquires shares now but doesn't have to pay for them immediately. Also known as partly paid shares or deferred payment shares.

Restricted shares

Shares which are subject to initial restrictions affecting their value e.g. non-voting, subject to forfeiture if the employee leaves within a specified period. These restrictions may fall away after that period has passed.

SAYE option scheme

A UK Revenue approved option scheme under which options may be granted to all employees of an independent company. Employees must agree to save a fixed monthly or weekly amount which at the end of the option period they may either use to exercise their options or simply withdraw. Also known as Sharesave and Save As You Earn options.

Share Incentive Plan

A UK Revenue-approved scheme for providing employee shares, enabling employees to purchase shares (partnership shares) out of gross pay or receive free shares free of income tax and National Insurance. Also known as SIP. Shares must be offered to all employees.

Unapproved options

Employee share options which (unlike EMI options, CSOP options and SAYE options) do not provide participants with income tax advantages. Also known as non-approved options.