case study

Enterprise Management Incentive Share Options (EMIs) for an engineering client.

the challenge:

An engineering client wanted to set up an Enterprise Management Incentive share option scheme (EMI) for key employees; one tranche of which involved a reasonably straightforward right to acquire shares out of an employee benefit trust, whilst the other presented complex drafting and structuring issues. Particular issues included the number of shares subject to the EMI options which would be linked to net proceeds on a future exit (subject to variable financial conditions, including level of net proceeds achieved); and was in three tiers (again subject to variable financial conditions including levels of marketing capitalisation).

our approach:

Through our experience of EMIs and understanding of the client’s sector we looked to formulate an EMI arrangements that, was tied in with provisions in the articles of association and the shareholders’ agreement of the company as well as payment priority on a sale exit.

the result:

The drafted EMI documentation reached the client’s desired solution which allowed for contingent variables, including last minute price changes on an exit, fluctuations in net proceeds calculations due to possible corporate restructuring and a full or partial listing of the company. The structure of the EMI also met the client’s more complex demands.