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 (EMI) share option scheme 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.