UNAPPROVED SHARE OPTION SCHEMES ‘Unapproved’ share option schemes are referred to as such because they generally do not require revenue approval. The approved schemes referred to earlier in this publication – APSS and SAYE – will work well in the business settings they were designed for, but we should not approach share option schemes with the idea that there can be a one-size-fits-all solution, as that is not necessarily the case. One of the key features of approved schemes is that they must be offered to all eligible employees and on the same terms, but this can be problematic for SMEs and startups whose needs may be better met by a more flexible approach, one that allows them to target key individuals, with a view towards retaining and/or attracting key talent. Unapproved schemes help to provide the flexibility that some companies need. Just as there is more than one type of approved scheme, the same is true for unapproved schemes. From a taxation perspective, the various schemes under the unapproved ‘umbrella’ tend to be categorised into two groups – short options and long options, with the former referring to schemes in which options must be exercised within seven years, and the latter referring to schemes in which no such restriction applies. The taxation benefits tend to be more generous with approved schemes, but unapproved schemes – with their greater flexibility – still make more sense for many companies.
WHEN THE PERFORMANCE OF 196 PUBLICLY TRADED ESOP AND NON-ESOP COMPANIES WERE COMPARED, THE ESOP COMPANIES OUTPERFORMED THEIR PEERS SIGNIFICANTLY IN SOME AREAS:
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