Employee share option agreement: performance based
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About this share option agreement
This document will be bought by any company to set up a motivational option scheme for an employee working in any capacity.
It is assumed that the employee will achieve some goal or target to qualify. The option is triggered by the performance criteria agreed between the company and the employee and set down as a schedule to this agreement.
We have provided an example deal, but it is for you to enter details of your exact deal. That may be any arrangement you like.
We have provided for the optioner to pay for the option and also to pay for the shares on exercise of the option. Either or both provisions may be deleted or the sums increased or reduced.
Alternatives to this agreement
Net Lawman sells variations on this agreement for:
- the trigger being a higher share price and not performance criteria;
- options for a third party: a consultant or contractor or marketer;
You can see these at Share option agreements.
This would also be a good time to put into place a new shareholders’ agreement whilst you are in charge of the shares. If you wait until the optioner is a new shareholder, you will have to take greater account of what he wants. Look at Shareholders' agreements.
The law in this share option agreement
This document is drawn under basic contract law: no special rules, no tax arrangements, no complications. The law which is followed is of Companies Act, 2008,.
- Definitions and interpretation
- Optional reference to main contract for work
- Option data
- Grant of option
- Conditions for exercise of option
- What happens if contract of employment is terminated before option is exercised
- Warranties by the company
- Draft notice by optioner to exercise the option
- Draft list of matters which may affect optioner’s decision
This document was written by an attorney for Net Lawman. It complies with current South African law.
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