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UK Life Sciences and Healthcare Newsletter – March 2021: Granting Incentives Under U.S. Plans to UK-based Executives



One of the most effective ways to incentivise staff, in particular senior employees, is to offer them the opportunity to purchase stock or shares in a group company. U.S. companies often operate stock and other incentive plans that apply the same terms to their international workforce as apply to their U.S. employees, often for good reasons such as consistency and ease of administration. However, care needs to be taken to ensure that specific tax, employment and regulatory rules in the relevant jurisdictions do not impair the effectiveness of the corporation’s incentive arrangements. The use of sub-plans or tailored grant documentation, varying the application of the rules of the overall U.S. plan to reflect the UK law and tax context, may be essential to avoid difficulties arising in a variety of areas. Restrictive covenants

It is common for U.S. incentive plans to include, as terms applicable to the grant of the relevant incentives, non-compete and other post-termination restrictive covenants. However, it is important to appreciate that non-compete and other post-termination restrictive covenant provisions that are perfectly valid and enforceable in the U.S. – or at least certain states in the U.S. – may not automatically be enforceable in the […]

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